ANNUAL REPORT 2014 / 15

Transcrição

ANNUAL REPORT 2014 / 15
MAGA ZINE
MAGA ZINE
MAGAZINE
UPGRADE
CONTE NTS
The merger between TUI AG and TUI Travel PLC has created
the world’s leading tourism business. The TUI Group is unique
among its peers in the way it covers the value chain in the travel
sector. The Group stands for an attractive dividend policy and
an international working environment. That means an upgrade
for customers, shareholders and employees.
A N N UA L R E P O R T 2 0 14 /15
VISION
Discovering the world’s diversity, exploring new horizons,
experiencing foreign countries and cultures: travel broadens
peoples’ minds. At TUI we create unforgettable moments
for our customers across the world and make their dreams
come true.
»In
the
completed
financial
We are
mindful
of the importance
of travel andyear,
tourism for
many countries in the world and the people living there.
we
havewithtaken
a number
of their future –
We partner
these countries
and help shape
in a committed
and sustainable
manner. that the
key
decisions
to ensure
We, the 76,000 TUI employees. Opening up the inspiring
TUI
Group can continue
world of travel. Think travel. Think TUI .
its growth course unabated.«
Friedrich Joussen, Joint CEO
5
T U I G R O U P – F I N A N C I A L H I G H L I G H T S & O U R S T R AT E G Y
Vision
CONTE NT S
TO OUR SHAREHOLDER S
2
6
7
18
01
73
MANAGEMENT REPORT
A N N U A L R E P O R T F O R M AT S
TO OUR SHARE HOLDERS
23
32
36
39
This annual report is available
in the following formats:
Report of the Supervisory Board
Audit Committee Report
Executive Board and Supervisory Board
Corporate Governance Report /
Statement on Corporate Governance
TUI share performance
Print
02
Online
Tablet
http://annualreport201415.tui-group.com
MANAGEMENT REPORT
80
97
115
120
154
157
159
C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
Letter to our shareholders
TUI Group – financial highlights
Our strategy
Group Executive Committee
C O M PA S S
TUI Group Fundamentals
Risk Report
Overall assessment by the Executive Board
and Report on expected development
Report on economic position
Annual financial statements of TUI AG
Information required under takeover law
Report on subsequent events
This is a page
reference.
This is a
web link.
03
CONSOLIDATED FINANCIAL
STATEMENTS AND NOTES
162
163
164
166
168
169
Income Statement
Statement of Comprehensive Income
Financial Position
Statement of Changes in Group Equity
Cash Flow Statement
Notes
303
304
313
Responsibility statement by management
Independent Auditor’s Report
Forward-looking Statements
2
A N N UA L R E P O R T 2 0 14 /15
LE T TER TO OUR
SHAREHOLDERS
Dear Shareholders,
We are delighted to be able to look back on a year of positive developments for the TUI Group. They
are reflected in our growth, our operating results and the integration and restructuring progress we
have achieved since the merger at the end of 2014. In fact, we have made considerably faster progress
than anticipated. Obviously this is good news for you, our shareholders, but also for our customers
and employees.
In the past financial year we ushered in a new era for TUI AG and TUI Travel PLC . When the merger
went ahead on 17 December 2014 the world’s largest leisure travel group was created.
The key objective behind the merger was to combine our tour operator business with the Group’s own
hotel and cruise companies. This has been achieved through the new organisational structure.
A number of hierarchical levels were eliminated during the restructuring process and, as a result, we
are now a leaner, more agile and more competitive organisation. It is also due to these organisational
changes that we have been able to step up the pace of the integration process. The associated positive
impacts on our operating performance meant that it lost no momentum during the change process.
Moreover, we again achieved double-digit growth in earnings and met our ambitious underlying
EBITA target of around € 1bn.
We are pleased to share this positive business development with you by offering you an attractive
dividend. A proposal to increase the dividend to 56 cents per share will be made by us at the 2014 / 15
Annual General Meeting. This represents a 70 percent year-on-year increase.
Further to the initial positive impact of the merger on our operations we have also made significant
headway in delivering the synergies that we announced. We have combined TUI AG and TUI Travel PLC
group functions with the aim of achieving € 50 m in savings by the end of the 2016 / 17 financial year.
This is € 5 m more than we initially envisaged and announced at the time of the merger. At the same
time, the non-recurring expenses necessary to deliver these synergies will be cut by € 10 m to € 35 m.
We expect to be generating additional savings of € 20 m per annum as of the 2016 / 17 financial year
through the restructuring and integration of TUI Destination Services.
In light of our performance to date we are confident of being in a position to fully deliver the envisaged
cost savings by the 2016 / 17 financial year.
VISION
MAGA ZINE
3
A NVision
N U A L R EAPNONRUTA2L0 R1 4E P/ 1O5R T 2 0 1 4 / 1 5
come true.
We are mindful of the importance of travel and tourism for
We partner with these countries and help shape their future –
in a committed and sustainable manner.
world ofFromtravel.
left to right: Joint
Think
CEO s Friedrich
travel.
JoussenThink
and Peter Long
TUI .
5
4
A N N UA L R E P O R T 2 0 14 /15
Not only does the merger allow us to exploit cost synergies, it also means that we can cover the entire
tourism value chain in an unprecedented way. We can offer our customers one-stop shop services
ranging from holiday bookings and flights to hotel or club resort accommodation, plus fully comprehensive support. This is a USP that differentiates us from the traditional tour operators and online portals
because we own the content, i.e. the hotels, clubs and cruise ships. Our own hotels and cruise ships are
major assets that are crucial to our future growth, which is why we will continue to invest in them. In
conjunction with our services they deliver a powerful brand experience to our customers and, for this
reason, we will be shifting our business model’s focus from tour operator business to content in future.
In this regard we will continue to follow a very clear strategic growth agenda. We aim to increase turnover, acquire new customers and launch new destinations – particularly all-year destinations. Our tour
operators’ strong market presence plus our (online and offline) distribution make us confident that
the market will accept our growth and that our bookings will increase. The risk / reward ratio for our
hotel and cruise investments is also considerable more positive today due to our strengths as an
integrated tourism group.
Despite the many positive developments we have seen in the past financial year, we also experienced
the devastating terrorist attack in Sousse. It shocked our Group, our sector and the holiday destination
of Tunisia to the core. 33 TUI customers – mostly from the UK – lost their lives in the terrible incident.
Our thoughts remain with the families and relatives of the victims.
This inhumane act of violence inspired many people to perform courageous and commendable acts. The
Riu and TUI ground staff and the TUI care teams immediately did their best to care for our customers
who were affected by the tragedy. They saved lives and did everything in their power to support, comfort and provide solace to our customers in Sousse. In affected source markets, particularly the UK ,
colleagues worked tirelessly as victims, families, friends and customers holidaying in other parts of
Tunisia were brought home and holidays re-arranged for those about to start their holidays in that
country. We are sure you will join us in thanking all involved for their extraordinary and moving efforts.
The TUI Group has got off to a great start. We have an excellent market position, we have a clear growth
strategy and the Group itself is optimally structured. We will continue to pursue our strategy and
endeavour to maintain our current pace of progress in order to ensure the TUI Group continues to be
the first choice for you, our customers and our employees.
We appreciate and thank you for your confidence, support and loyalty to the TUI Group.
Yours sincerely,
Friedrich Joussen
Peter Long
Joint CEO of TUI AG
Joint CEO of TUI AG
A N N UA L R E P O R T 2 0 14 /15
MAGA ZINE
VISION
come true.
We are mindful of the importance of travel and tourism for
We partner with these countries and help shape their future –
in a committed and sustainable manner.
world of travel. Think travel. Think TUI .
5
Vision
6
A N N UA L R E P O R T 2 0 14 /15
TUI Group – fi nancial highlights
TUI GROUP –
FINANCIAL HIGHLIGHTS
2014 / 15
2013 / 14
restated
Var. %
20,011.6
18,536.8
+ 8.0
530.3
103.5
68.8
234.6
80.5
– 21.1
996.6
56.2
116.8
– 100.6
1,069.0
– 8.5
1,060.5
398.3
163.0
81.7
202.8
9.7
– 22.3
833.2
45.5
101.7
– 110.5
869.9
– 2.8
867.1
+ 33.1
– 36.5
– 15.8
+ 15.7
+ 729.9
+ 5.4
+ 19.6
+ 23.5
+ 14.8
+ 9.0
+ 22.9
– 203.6
+ 22.3
865.3
777.2
+ 11.3
Underlying EBITDA
1,505.9
1,199.8
+ 25.5
EBITDA
1,362.0
1,163.6
+ 17.1
€
379.6
0.64
270.8
0.26
+ 40.2
+ 146.2
%
17.2
18.1
– 0.9 3
594.3
213.7
76,036
385.7
– 292.4
77,028
+ 54.1
n. a.
– 1.3
€ million
Turnover
Underlying EBITA 1
Northern Region
Central Region
Western Region
Hotels & Resorts
Cruises
Other Tourism
Tourism
Specialist Group
Hotelbeds Group
All other segments
TUI Group
Discontinued operation
Total
EBITA 2
Net profit for the period
Earnings per share
Equity ratio
Cash investments in other intangible assets and property,
plant and equipment
Net debt
Employees
Differences may occur due to rounding.
1 In order to explain and evaluate the operating performance by the segments, EBITA adjusted for one-off eff ects (underlying EBITA )
is presented. Underlying EBITA has been adjusted for gains / losses on disposal of investments, restructuring costs according to IA S 37,
ancillary acquisition costs and conditional purchase price payments under purchase price allocations and other expenses for and income
from one-off items.
2 EBITA comprises earnings before net interest result, income tax and impairment of goodwill excluding losses on container shipping measured at equity and excluding the result from the measurement of interest hedges.
3 Equity divided by balance sheet total in %, variance is given in percentage points.
Our Strategy
OUR
STR ATEGY
A N N UA L R E P O R T 2 0 14 /15
7
8
A N N UA L R E P O R T 2 0 14 /15
Our Strategy
T H E N E W T U I G R O U P 2 0 14 / 15
THE WOLRD’S LE ADING
TOURISM BUSINE SS
In the first year following the merger we have outperformed our operating
earnings target of € 1 bn despite some geopolitical challenges earlier in the
year. The integration of our businesses is on track and already delivering results.
Our strong operational performance is reflected in the announced dividend
of 56 cents per share.
We have defined a clear strategy and growth roadmap and therefore expect to
deliver growth in underlying EBITA of at least 10 % in 2015 / 16 and reiterate
our previous guidance of at least 10 % underlying EBITA CAGR over the next
three years to 2017 / 18.
€
M
1,069
UNDERYLING
G R O U P E B I TA
+ 23 %
In our first year postmerger
we have outperformed
our earnings target of more
than € 1 bn underlying
EBITA.*
Balance sheet
strength and
flexibility
Our strong balance sheet and our flexible
asset-right business model underpin our
long-term growth plans.
* At
constant currency
Resilient
business model
Our strong operational performance
in 2014 / 15 demonstrates the resilience
of our integrated business model .
€
CENT
56
DIVIDEND
20
€ M
SYNERGIES R E A L I Z E D
The integration of our two businesses
is on track and already delivering
results.
+ 70 %
Through our progressive
dividend policy our shareholders benefit from our
growth.
Clear strategy
and growth
roadmap
We reiterate our previous guidance
of at least 10 % underlying EBITA
CAGR over the next three years to
2017 / 18.*
Our Strategy
A N N UA L R E P O R T 2 0 14 /15
Destinations
Aircraft
MORE THAN
140
Employees
180
76
COUNTRIE S
Group-owned
hotels
K
WORLDWIDE
300
OVER
WORLDWIDE
13
CRUISE SHIPS
5
T O U R O P E R AT O R AIRLINES
9
10
A N N UA L R E P O R T 2 0 14 /15
Our Strategy
Marketing & Sales
»20
m
CUSTOMER S
We control the end-to-end customer journey, from
inspiration and advice, to booking, flight, inbound services
and accommodation. This differentiates us from the
competition. We are capitalizing on the strength of the
TUI brand on a global scale. A global brand experience
and a global brand identity offer many advantages for our
customers, suppliers and for our employees.
OUR VERTIC ALLY
INTEGR ATED
Hotels & Cruises
»7
m
CUSTOMER S
Having our own hotels and cruise ships gives us product
differentiation. We currently accommodate over 7 million
customers in our own hotels and cruise ships. We control
quality and customer satisfaction and can fulfill customer
demand for destinations and experiences where content is
scarce. Growth in accommodation will be key in driving
profitable top-line growth. This is driven by three elements:
Growth in our strong hotel and club brands, growth in
our powerful and exclusive international hotel concepts and
profitable growth in cruises.
Our Strategy
A N N UA L R E P O R T 2 0 14 /15
Flight
»13
m
CUSTOMER S
We have more than 140 aircraft operated by five tour
operator airlines, flying around 13 million customers per
annum. Our integrated business model provides us with
high occupancy rates. With our joint aviation platform we
want to future-proof our airlines, and this will only be
possible if we leverage the potential economies of scale.
We expect to benefit in the areas of aircraft purchasing
and financing, engineering and maintenance, one IT and
joint long-haul planning and procurement.
BUSINE SS MODE L
Inbound services
»11
m
CUSTOMER S
Our unique inbound services brings our brand alive and further enhances our customers’ holiday experience. Inbound
services is currently operating in more than 100 destinations
with over 6,500 employees with access to c. 11 million
customers. We have implemented one service team and
a single strategic customer platform for all the tourism
activities within the TUI Group. We are delivering our differentiation strategy in all the destinations.
11
12
A N N UA L R E P O R T 2 0 14 /15
Our Strategy
Marketing & Sales
In the next few years we aim to grow faster than the market. We will be aided in this by the global strength of the
TUI brand. TUI stands for Trusted. Unique. Inspiring. Our mission “Spreading Smiles” reflects our promise to
put a smile on our customers’ faces with our products. We don’t want to be just any tour operator. We want to
be synonymous with travel, impossible for any aspiring holiday-maker to ignore: “Think Travel. Think TUI .”
oneBrand
STRONG SALES
TR AVEL PL ATFORMS
The appeal of TUI and the Smile logo are extremely high.
OneBrand offers significant opportunities in terms of
growth potential, consistency of customer experience, digital
presence, operational efficiency and competitive strength.
In the long run, there will be one brand wherever it makes
sense, maintaining our local roots. On 1 October 2015,
we successfully launched our rebranding campaign with the
introduction of the TUI brand in the Netherlands.
AND
TR AVEL AGENCIES
+2 %
+3 %
FIRST STEP
Netherlands
70
41
1 OCTOBER 2015
Share in
%
ONLINE
CONTROLLED
A central element of our marketing and sales strategies
are our shops and platforms. All source markets are
focused on delivering more direct, more online sales. In
2014 / 15 controlled distribution grew by two percentage points to 70 %. Online distribution grew by two
percentage points to 41 %.
20
M –––––––––––––––
CUSTOMERS
We are able to provide to our
more than 20 m customers the holiday
experiences that they desire.
P R O F I TA B L E G R O W T H
more
FLEXIBILITY AND
L O N G - H A U L D E S T I N AT I O N S
In order to outperfom the market we are broadening our offering in existing source
markets – this includes long-haul expansion, wider choice of ﬂight times and durations
due to the inclusion of third-party flying options. We also aim to tap new source
markets through our scalable technology platforms.
Our Strategy
A N N UA L R E P O R T 2 0 14 /15
Flight
We are building a common aviation platform for our five tour operator airlines to leverage scale and future-proof
our airlines. We will act as one wherever it makes sense to do so, maintaining local differences where the benefits
of differentiation are greater than those of harmonisation.
BOEING 787
Dreamliner
We are the only leisure airline operating Boeing 787 Dreamliners, which is
a key differentiator on long-haul destinations. Flying in a 787 delivers an
enhanced customer experience as well as cost efficiency due to lower fuel
consumption than similarly sized aircraft. Consequently, the 787 opens up
new destinations, adding to our significant and growing long-haul presence.
D R E A M L I N E R O P E R AT E D
13
2014 / 15
one
AVIATION
In future our airlines will act as
one virtual airline. Organisational
structure, the business model
and scale are the main elements
of our central platform.
16
+3
2018 / 19
Inbound Services
Servicing our customers at their holiday destination is an integral part of our aim to create a superior end-to-end
customer experience. Apart from transfers to their hotels, we offer our customers end-to-end services and attractive
options such as local excursions. To this end, we have pooled our incoming agencies in a common organisation.
We now operate one common customer platform in order to efficiently manage all tourism activities. This ensures
implementation of our differentiation strategy in all destinations.
11
100
6,500
MILLION
CUSTOMERS
MORE THAN
DESTINATIONS
MORE THAN
EMPLOYEES
Integration
From 2015 / 16, these activities will
be fully integrated within our
tour operators. Our customers will
benefit, and so will our dedicated
employees. At the same time, we
will be saving costs.
13
14
Our Strategy
A N N UA L R E P O R T 2 0 14 /15
Hotels
With Hotels & Resorts, the TUI Group has an attractive portfolio of hotels in top locations. We are aiming to
expand that position by means of strengthening our differentiation strategy and optimising our portfolio of
Group-owned hotels and sharpening our brand profile. We had identified further growth potential through the
internationalisation of our hotel brands and exclusive hotel concepts. We also want to develop new, exclusive
hotel projects in top locations. We are targeting around 60 new hotels by financial year 2018 / 19.
Riu
TUI Blue
Riu is TUI Group’s largest hotel
brand, characterised by excellent
service, location and quality. Expansion to new destinations will
be an important growth lever.
Further growth will be achieved by
on-going portfolio optimisation
and facility refurbishment.
AT TR ACTIVE
PORTFOLIO
OF MORE THAN
100
TUI Blue is our new hotel brand focusing on differ-
entiation and quality. As a distinctive customer
proposition, it offers a premium all-inclusive concept.
TUI Blue is the Group’s first hotel brand to feature
our own name, making TUI an end-to-end customer
experience, from booking to flight and accommodation as well as post-journey services.
HOTEL S
7 NE W PROJEC TS
B E R L I N ( 2 0 14 / 15 )
PREMIUM
ALL-INCLUSIVE
CONCEPT
N E W YO R K C I T Y ( 2 0 15 / 16)
B U L G A R I A ( 2 0 14 / 15 )
D O M . R E P U B L I C ( 2 0 15 / 16)
S R I L A N K A ( 2 0 15 / 16)
A R U B A ( 2 0 14 / 15 )
M A U R I T I U S ( 2 0 14 / 15 )
50 new hotels
We will launch the first TUI Blue hotels in Turkey in
May 2016. In the medium term TUI Blue is to
comprise 50 hotels, both new hotels and repositioned
existing hotels.
Robinson
Magic Life
Robinson is our professional
offering of sport, entertainment
and programmed events. In
terms of growth levers, Robinson
will focus on increased source
market distribution, increased
direct distribution globally
and international expansion.
Magic Life is characterised by family friendly holiday
villages, varied sport and international entertainment programmes. A strong integration with source
markets has already led to a significant increase in
occupancy. For future growth, Magic Life will benefit
from a further internationalisation of concept
through source markets and increased distribution
globally.
NEW CLUBS
2 0 15 / 16
Turkey
2 0 15 / 16
2 0 15 / 16
Greece
Maldives
Our Strategy
A N N UA L R E P O R T 2 0 14 /15
Cruises
With TUI Cruises and Hapag-Lloyd Cruises, the TUI Group has two strong brands for premium, luxury and expedition
cruises in Germany. We also operate in the UK market under the Thomson Cruises brand.
TUI Cruises
Thomson
Cruises
With its four ships TUI Cruises is well
positioned in the German market for premium
cruises. Further growth is secured by additional capacity – four further ships have been
ordered, which will be launched by 2019.
Mein Schiff 5 and Mein Schiff 6 will be
commissioned in 2016 and 2017.
MEIN SCHIFF 5
At Thomson Cruises we will fully modernise the
fleet to significantly enhance the quality of our
offering, starting with the launch of Thomson
Discovery in early 2016. The planned redeployment
of Mein Schiff 1 and Mein Schiff 2 to Thomson
Cruises will further expand our fleet and secure
our market share in the British cruise market.
2 0 16
4
MEIN SCHIFF 6
2 0 17
SHIPS
4
P R O F I TA B L E
GROW TH
THOMSON DISCOVERY
E A R LY 2 0 16
ORDER BOOK
Hapag-Lloyd
Cruises
With Hapag-Lloyd Cruises, we continue to
focus on luxury and expedition cruises. The
successful repositioning of the brand has
been completed and the turnaround was
delivered in 2014 / 15. Europa 2, the most
ultramodern vessel in the fleet, was awarded
the title Best Cruise Liner of the Year 2015
by the magazine Hideaways.
W E A R E E X PA N D I N G O U R
FLEE T TO BECOME
BEST CRUISE LINER
OF THE YEAR
ONE OF EUROPE’S
LEADING
CRUISE LINES.
E U R O PA 2
15
16
A N N UA L R E P O R T 2 0 14 /15
Our Strategy
Sustainability
We take responsibility for society and our environment. Our sustainability strategy “BetterHolidays, Better World“
defines very clear and verifiable objectives that the TUI Group aims to achieve by 2020. For us, sustainability is
not an “in vogue” issue but has been an inherent part of our corporate culture for many years. After all, it is not
by mere coincidence that we are the only tourism group listed in the Dow Jones Sustainability Index – for the
tenth consecutive time. In order to further enhance our leadership in this area, too, we have set ourselves a number
of very ambitious goals for the next five years. By 2020 we aim to further reduce our ecological footprint and
therefore reduce our specific CO 2 emissions by a further 10 %. In our destinations we want to further enhance the
positive impacts of tourism on social development and wealth. And, last but not least, we aim to set new standards
for sustainable development in our sector and work with our partners in the destinations in order to protect the core
element of any holiday trip: an intact and livable holiday region.
10.
FOLD –––––––
DOW JONES
SUSTAINABILIT Y INDEX
TUI Group ist the only tourism group
listed in the DJSI .
CO2
– 10 %
UNTIL 2020
By 2020 we aim to reduce our
CO 2 intensity by 10 %.
N E W S T R AT E G Y
step
lightly
make
a difference
lead
the way
betterholidays
betterworld
TUI sustainability strategy
2015 – 2020
Reducing the environmental impact of
holidays through our own operations
Creating positive change for people
and communities through our value
chain and customers
Pioneering sustainable tourism
influencing the wider industry and
beyond
Our Strategy
A N N UA L R E P O R T 2 0 14 /15
Our clients
Our people
We want to open new horizons for our
customers and create unforgettable moments across the world. We want our
brand to become the epitome of travel:
Think Travel. Think TUI . By doing this
we want to inspire even more people for
our products and services.
Our 76,000 employees are the face of
our group and bring our brand to life. Their
dedication and loyalty are key for us.
We want to further strengthen this committment and become an international
employer of choice.
Our shareholders
Our responsibility
We create value for our shareholders
and want to deliver against our clear growh
targets. Over the next three years to
2017 / 18 we want to deliver at least 10 %*
underlying EBITA CAGR . Through our
attractive dividend policy our shareholders
benefi t from our growth.
We are mindful of the importance of
travel and tourism for many countries in
the world and the people living there.
We take responsibility for people and communities. With our investments we help
to shape the future in a committed and sustainable manner.
OUR
TARGE T S
* On
constant currency basis
17
18
A N N UA L R E P O R T 2 0 14 /15
G RO U P E X E C U T I V E CO M M I T T E E
KENTON JARVIS
Group Director Controlling and
Financial Director Tourism
ELIE BRUYNINCK X
Western Region
DAVID BURLING
Member of the Executive Board;
Nothern Region, Airlines, Hotel Purchasing
FRIEDRICH JOUSSEN
Joint CEO
PETER LONG
Joint CEO
DR HILKA SCHNEIDER
Director Legal, Compliance & Board Office
THOMAS ELLERBECK
Group Director Corporate & External Affairs
A N N UA L R E P O R T 2 0 14 /15
19
SEBASTIAN EBEL
WILLIAM WAGGOTT
Member of the Executive
Board;
Specialist Group,
Hotelbeds Group
Central Region, Hotels and Resorts, Cruises,
TUI Destination Services and IT
ERIK FRIEMUTH
Group Chief Marketing Officer
FRANK ROSENBERGER
Group Director Strategy
DR ELKE ELLER
Human Resources
HORST BAIER
CFO
Please refer to our website for CV s
www.tuigroup.com/en-en/about-us/
management
Marine habitats are essential to the cruise sector. That
is why the design of the Mein Schiff newbuilds paid such
careful attention to using resources wisely and keeping
emissions low. Mein Schiff 5 is currently under construction
in Finland; two sister ships are already plying the oceans
with their advanced environmental technology.
» R E A D M O R E A B O U T B U I L D I N G M E I N S C H I F F 5 I N O U R
M A G A Z I N E U N D E R „ F U L L ST E A M A H E A D “
TO OUR
S HAREH OLDERS
CO N T E N T S
23 Report of the Supervisory Board
32 Audit Committee Report
36 Executive Board and Supervisory Board
39Corporate Governance Report /
Statement on Corporate Governance*
73 TUI share performance
* As part of the Management Report
22
TO OUR SHAREHOLDERS
(from left to right)
Top row:
Prof. Christian Strenger,
Timothy Martin Powell,
Dr Dierk Hirschel, Marcell Witt,
Maxim G. Shemetov,
Michael Pönipp,
Andreas Barczewski,
Peter Bremme, Wilfried H. Rau
Middle row:
Ortwin Strubelt, Carola Schwirn,
Prof. Dr Edgar Ernst,
Janis Carol Kong, Anette Strempel,
Carmen Riu Güell
Bottom row:
Frank Jakobi
(Vice Chairman),
Coline Lucille McConville,
Prof. Dr Klaus Mangold (Chairman),
Sir Michael Hodgkinson
(Vice Chairman),
Valerie Frances Gooding
TO OUR SHAREHOLDERS
23
REPORT OF THE
SUPERVISORY BOARD
Ladies and Gentlemen,
The Report of the Supervisory Board presented below tells you
about our activities in financial year 2014 / 15.
will find some additional explanatory comments, in particular for our
new shareholders from the Anglo-Saxon environment who may be less
familiar with the management system in a German stock corporation.
A successful business year marked by
ground-breaking change
Apart from the merger and integration, we maintained our focus on
our day-to-day business. Acting in concert with the Executive Board,
the Supervisory Board held in-depth discussions about our future
organisational structure and the strategic development of the TUI
Group’s business model. We also dealt with the appalling attack in
Tunisia at the end of June 2015. In several extraordinary meetings
we dealt with the situation in Tunisia and the measures implemented
by the Executive Board. We were greatly distressed and saddened by
the killings and severe injuries suffered by defenceless TUI customers
on the beach. At the same time, we were deeply concerned about
the traumatisation of our employees on the ground and in the crisis
teams. The Executive Board and all our employees did an outstanding
job in managing the crisis, for which they won widespread recognition
in Germany and elsewhere. In this context, the Supervisory Board once
again turned its attention to our security and crisis management.
TUI AG is looking back upon a financial year marked by charting a
new course. On 28 October 2014, the Extraordinary General Meetings of TUI Travel PLC (“ TUI Travel”) and TUI AG resolved the
merger of the two companies in the form of an all-share nil-premium
merger. This means that you, our shareholders, gave the final goahead to fully merge two companies which had been largely independent beforehand. Both the Executive Board and Supervisory
Board promised you that they would tap into substantial synergies,
not least by removing overlapping functions at the two holdings but
also through a deeper integration of the two business models. We
have worked hard to deliver these goals ever since.
The first quarter of the completed financial year was, of course,
marked by preparing for the merger and its completion according to
the German Stock Corporation Act, which was effected in mid-
December 2014. Only a few days later, the Integration Committee,
newly established by the Supervisory Board, came together for its
first meeting (goals, tasks and priorities see page 29 of the present
report). In Q2 to Q4 of the financial year under review, the Group’s
Supervisory Board, Executive Board and employees worked towards
numerous goals, creating processes and structures but also a joint
corporate culture for the new company, and filling it with life.
The Supervisory Board itself also underwent a successful integration
process in the period under review. In accordance with the merger
agreement, the Supervisory Board now includes five members of the
Board of Directors of the former TUI Travel as shareholder represen
tatives. Against this background, we were deeply involved in forging
a joint understanding of corporate governance in a German stock corporation with a primary quotation on the London Stock Exchange.
This constellation is currently unique and entails a number of challenges, not least in terms of understanding one another. I am therefore delighted to be able to inform you on the next few pages about
the progress we have achieved. In the present Annual Report you
We also gave our opinion and voted on a number of technical issues
and business transactions requiring approval. As a Supervisory Board,
we focused in particular on overseeing compliance with the German
Corporate Governance Code (“ DCGK ”), clarifying questions about
the UK Corporate Governance Code (“ UK Code”), offering review
and consultation around the financial statements of TUI AG and the
Group and adopting resolutions on personnel issues relating to the
Supervisory and Executive Board. In this context we also gave much
thought to the future composition of the Supervisory Board following the close of the Annual General Meeting in 2016. We issued public
information on this matter and placed it on our Company’s website.
With the letter of invitation to the AGM 2016, you will receive the outcome of our deliberations and our proposals for candidates to stand
for election as shareholder representatives on the Supervisory Board.
In summary, we can observe that your Company took a major step
ahead in the financial year under review. The Company has managed
to set the course for a successful future and significantly exceed the
budgeted targets. Let me thank the employees and the Executive
Board of the TUI Group on behalf of the Supervisory Board, for
shouldering the resulting extraordinary workload.
24
TO OUR SHAREHOLDERS
Cooperation between the Executive Board and the
Supervisory Board
As TUI AG ’s oversight body, the Supervisory Board provided ongoing
advice and supervision for the Executive Board in managing the
Company in accordance with the law, the Articles of Association and
our terms of reference in financial year 2014 / 15, as it has always done.
Its actions were guided by the principles of good and responsible
corporate governance. Our monitoring activities essentially served
to ensure that the management of business operations and the
management of the Group were lawful, orderly, fit for purpose and
commercially robust.
Current composition of the Supervisory Board:
www.tuigroup.com/en-en/about-us/management
I N F O R M AT I O N O N T H E T W O -T I E R S Y S T E M ( T W O -T I E R B O A R D )
about strategic development, planning, business performance and
the position of the Group in the course of the year, the risk situation,
risk management and compliance, but also reports from the capital
markets (e. g. from analysts). The Executive Board discussed with us
all key transactions of relevance to the Company and the further
development of the Group. Any deviations in business performance
from the approved plans were explained in detail. The Supervisory
Board was involved in all decisions of fundamental relevance to the
Company in good time. We fully discussed and adopted all reso
lutions in accordance with the law, the Articles of Association and
our terms of reference. We were completely and speedily informed
about specific and particularly urgent plans and projects, including
those arising between the regular meetings. As Chairman of the
Supervisory Board, I was regularly informed about current business
developments and key transactions in the Company between Super
visory Board meetings.
In a stock corporation according to German law, there is a mandatory
strict separation of the executive board and the supervisory board.
While the management of the company is the exclusive task of the
executive board, the supervisory board is in charge of advising and
overseeing the executive board.
Deliberations in the Supervisory Board and its
Committees
The individual advisory and oversight tasks of the supervisory board
are set out in accordance with the law, the Articles of Association and
our terms of reference. Accordingly, the supervisory board is, for
instance, closely involved in entrepreneurial planning processes and
the discussion of strategic issues. Moreover, there is a defined list of
specific executive board decisions requiring the consent of the super
visory board, some of which have to be fully examined in advance
and require the analysis of complex facts and circumstances.
Prior to Supervisory Board meetings, the shareholder represent atives
on the Supervisory Board and the employees’ representatives met
in separate meetings, which were regularly also attended by Execu
tive Board members. Meeting attendance was again gratifyingly high.
No Supervisory Board member attended fewer than half of the Super
visory Board meetings in financial year 2014 / 15. Average attendance
was 95.1 % (previous year 94.8 %) at plenary meetings and 96.9 %
(previous year 93.3 %) at Committee meetings. Members unable to
attend a meeting usually participated in the voting through proxies.
Preparation of all Supervisory Board members was greatly facilitated
by the practice of distributing documents in advance in the run-up
to the meetings and largely dispensing with handouts at meetings.
In written and verbal reports, the Executive Board provided us with
regular, timely and comprehensive information at our meetings and
outside our meetings. The reports encompassed all relevant facts
Financial year 2014 / 15 was again characterised by a busy meeting
schedule for the Supervisory Board and its Committees.
TO OUR SHAREHOLDERS
25
AT T E N D A N C E AT M E E T I N G S O F T H E S U P E R V I S O R Y B O A R D 2 0 14 / 15
AT T E N D A N C E AT M E E T I N G S O F T H E S U P E R V I S O R Y B O A R D 2 0 14 /15
Name
Prof. Dr Klaus Mangold (Chairman)
Frank Jakobi (Deputy Chairman)
Sir Michael Hodgkinson (since 12 December 2014,
Deputy Chairman since 9 February 2015)
Andreas Barczewski
Peter Bremme
Arnd Dunse (until 30 November 2014)
Prof. Dr Edgar Ernst
Angelika Gifford (until 11 December 2014)
Valerie Frances Gooding (since 12 December 2014)
Dr Dierk Hirschel (since 16 January 2015)
Janis Carol Kong (since 12 December 2014)
Vladimir Lukin (until 11 December 2014)
Coline Lucille McConville (since 12 December 2014)
Michael Pönipp
Timothy Martin Powell (since 12 December 2014)
Wilfried H. Rau (since 3 December 2014)
Carmen Riu Güell
Carola Schwirn
Maxim G. Shemetov
Anette Strempel
Prof. Christian Strenger
Ortwin Strubelt
Marcell Witt (since 16 January 2015)
Supervisory
Board
Presiding
Committee
Audit
Committee
Nomination
Committee
Integration
Committee
Galaxy
Committee
9 (9)
9 (9)
9 (9)*
9 (9)
6 (6)
7 (7)*
4 (4)*
4 (4)
1 (1)*
1 (1)
6 (7)
9 (9)
8 (9)
1 (1)
7 (9)
2 (2)
6 (7)
7 (7)
6 (7)
2 (2)
7 (7)
9 (9)
6 (7)
8 (8)
8 (9)
9 (9)
9 (9)
8 (9)
9 (9)
9 (9)
7 (7)
7 (7)
9 (9)
5 (5)
4 (4)
6 (6)
6 (6)*
2 (2)
3 (4)
1 (1)
2 (2)
5 (5)
5 (5)
3 (4)
7 (9)
6 (7)
7 (7)
8 (9)
5 (5)
6 (6)
6 (6)
4 (4)
1 (1)
(In brackets: number of meetings held)
* Chairman of Committee
TOPIC S DISCUSSED BY THE SUPERVISORY BOARD
ABOUT THE CO-DE TERMINED SUPERVISORY BOARD
TUI AG falls within the scope of the German Industrial Co-Determin
ation Act (MitbestG). Its Supervisory Board is therefore composed
of an equal number of shareholder representatives and employee
representatives. Employee representatives within the meaning of
the Act include an executive (section 5 (3) of the German Works
Council Constitution Act) and three trade union representatives. All
Supervisory Board members have the same rights and obligations
and they all have one vote in voting processes. In the event of a tie,
a second round of voting can take place according to the terms of
reference for the Supervisory Board, in which case the Chairman of
the Supervisory Board has the casting vote.
The meetings in detail:
1.At its meeting on 27 October 2014, the Supervisory Board discussed the status of the merger (“Project Galaxy”). It also comprehensively prepared the Extraordinary General Meeting to be
held on 28 October 2014 in that context. Following preliminary
discussion in the Presiding Committee, it furthermore discussed
the personal performance factor for the annual performance
bonus for Mr Joussen and Mr Baier for financial year 2013 / 14 and
the reference indicators for the annual performance bonus for
financial year 2014 / 15. The Executive Board presented its pre
liminary report on the completed financial year 2013 / 14 and submitted the budget for financial year 2014 / 15 and the planning for
the two subsequent financial years, adopted by the Supervisory
Board after deliberation. The Supervisory Board then discussed
the acquisition of Europa 2 and the sale of the shareholding in
Grecotel, and approved the declaration of compliance for 2014
pursuant to section 161 of the German Stock Corporation Act.
2.By written circulation on 14 November 2014, the Supervisory
Board resolved to sell the stake in Grecotel.
3.On 21 November 2014, after reviewing the various options in
detail and weighing up the advantages and disadvantages of
26
TO OUR SHAREHOLDERS
e ntering into a settlement in order to resist actions for annulment of AGM resolutions, the Supervisory Board resolved by
written circulation to authorise the Chairman of the Supervisory
Board to grant a power of attorney to external lawyers to negotiate and conclude the settlement.
4.At its meeting on 9 December 2014, the Supervisory Board
extensively discussed the annual financial statements of TUI AG ,
the consolidated financial statements, the combined management report for TUI AG and the Group and the Report by the
Supervisory Board, each having received an unqualified audit
opinion from the auditors, as well as the Corporate Governance
Report and the Remuneration Report. The discussions were also
attended by representatives of the auditors. Following comprehensive debate of these reports and its own review carried out
on the previous day by the Audit Committee, the Supervisory
Board endorsed the audit result of the auditors and approved
the financial statements prepared by the Executive Board and
the combined management report for TUI AG and the Group
prepared by the Executive Board. The annual financial statements for 2013 / 14 were thereby adopted. Moreover, the Supervisory Board approved the Report by the Supervisory Board,
the Corporate Governance Report and the Remuneration Report.
It also adopted the invitation to the ordinary AGM 2015.
The Supervisory Board likewise discussed the status of the
merger and the rules of a listing on the London Stock Exchange
and the preparatory activities of the Executive Board for “Day
One” after completion of the merger. After preliminary discussions by the Presiding Committee followed by deliberations
within the Supervisory Board, the Supervisory Board adopted
resolutions, applicable in the event of completion of the merger,
regarding the extension of the service contracts for Executive
Board members Mr Joussen and Mr Baier and the conclusion of
Executive Board service contracts with Messrs Ebel, Lundgren
and Waggott. The Supervisory Board furthermore adopted reso
lutions regarding capital increases, amendments to the Articles
of Association upon completion of the merger, and the listing of
the TUI AG share. It also approved resolutions by the Executive
Board on the acquisition of Europa 2 and the provision of guaran
tees for aircraft lessors. Moreover, the Executive Board presented
a report on the participation in Hapag-Lloyd AG .
5.On 9 February 2015, at the first Supervisory Board meeting
following the merger, the Supervisory Board elected Sir Michael
Hodgkinson as an additional Deputy Chairman and elected new
Supervisory Board members to the Committees. The meeting
went on to prepare the ordinary AGM in 2015 and to discuss the
CEO ’s report on the first quarter of financial year 2014 / 15. In
addition to the reports from other committees, the Integration
Committee in particular reported back from its meetings. The
discussions also focused on the HR and Social Report and the
status of the planned global employee survey. Moreover, the
Supervisory Board approved the acquisition of the cruise ship
Splendour for the UK market.
6.On 12 May 2015, the Supervisory Board discussed changes in the
composition of the Executive Board (for more detailed infor
mation, see page 36, Supervisory Board and Executive Board)
and discussed the plans to adjust the leadership structure with
the Executive Board. It also comprehensively debated the reports
by the Executive Board on Q2 and H1 of financial year 2014 / 15,
with the auditors also in attendance for this agenda item. The
Executive Board provided information on the structure and contents of the Capital Markets Day to be held the following day, and
presented a new draft format for a monthly reporting to the Supervisory Board about operating performance , which was subsequently adopted. Moreover, the Supervisory Board approved a
number of transactions (e. g. the construction of cruise ships
Mein Schiff 7 and Mein Schiff 8 and the sale of cruise ships Mein
Schiff 1 and Mein Schiff 2 to Thomson) and adopted a resolution
on the transfer of TUI Travel share options to TUI AG . It also
discussed a report on the interpretation of related party transactions and the draft agenda for the Supervisory Board’s strategy
meeting to be held in September.
7.The terms and conditions of the termination agreement with
Mr Lundgren was put to a vote by written circulation on
22 May 2015.
8.At the meeting on 30 June 2015, convened at short notice due
to the urgency of the issue, the Supervisory Board was informed
about the situation following the terrorist attack in Tunisia on
26 June 2015 and the crisis management by the Executive Board.
The members were informed in detail about the processes, the
measures implemented and the situation of customers and
employees.
9.On 9 July 2015, the Supervisory Board held a further extraordin
ary meeting to learn about the impact of the attacks in Tunisia.
It agreed a time schedule for an overall presentation and dis
cussion with the Executive Board of established procedures and
measures for crisis prevention and management in the Group.
10.At a further extraordinary meeting on 31 July 2015, the Supervisory Board resolved to appoint Dr Elke Eller as an Executive
Board member and Labour Director with effect from 15 October 2015 after she had personally introduced herself and after
comprehensive discussion of the matter in the Presiding Committee. The Supervisory Board furthermore defined the key terms
and conditions of her service contract as well as the schedule of
responsibilities. The Executive Board informed the Supervisory
Board about the recent developments following the terrorist
attack in Tunisia and about the planned IPO of Hapag-Lloyd AG .
An outline was also provided of the state of play and thinking on
changes to the remuneration for the Supervisory Board.
11.At the two-day strategy meeting on 2 and 3 September 2015,
the Supervisory Board discussed the strategic goals of TUI AG
and held in-depth debates on various issues. On the first day,
our exchange focused, inter alia, on the challenges in source
market Germany and the approaches developed by the Executive Board. Discussions also dealt with the characteristics of the
Chinese market and various options for a potential engagement of
TUI AG . The Executive Board presented the underlying thinking,
goals and implementation schedule for the Group’s global brand
strategy to the Supervisory Board for discussion. After consider
ing further topics, the Supervisory Board adopted the 5-year
plan for TUI AG submitted by the Executive Board. On the second
day, discussions focused, inter alia, on the prevention and crisis
management system for Tourism, based on proposals submitted
by the Executive Board. Debates also dealt with various corpor
ate governance issues, based on a joint belief in the importance
of good corporate governance that is reflected on the Super
visory Board and Executive Board; issues included the regular
limit on length of service on the Supervisory Board, the implementation of an efficiency review for the work performed by the
Supervisory Board, and a female quota for the Executive Board.
The Supervisory Board also approved an extension to a revolving
credit facility and the sale of the LateRooms Group, and reviewed
the status of the planned IPO of Hapag-Lloyd AG .
12.At its extraordinary meeting on 23 September 2015, the Supervisory Board debated and resolved a number of issues to be proposed to the AGM 2016 with regard to the future composition of
the Supervisory Board, the remuneration system for the Supervisory Board, the establishment and composition of committees
and a regular limit on length of service on the Supervisory
Board. It also adopted a resolution regarding the payment of an
additional cash compensation (discretionary bonus) to the Execu
tive Board members for their excellent and extremely time-
intensive work in the implementation of the merger and the inte
gration process as well as the delivery of synergies.
Furthermore, in addition to Supervisory Board meetings, the following
workshops were held in the framework of the merger and inte
gration process:
• a one-day induction workshop for new Supervisory Board members on 2 December 2014, and
• a joint workshop on selected items of German and British corporate
governance with internal and external experts on 23 April 2015.
A further workshop was held after the period under review on
6 November 2015.
Committee meetings
In the period under review, the Supervisory Board had set up five
committees to support its work: the Presiding Committee, the Audit
Committee, the Nomination Committee, the so-called Galaxy Commit
TO OUR SHAREHOLDERS
27
tee, and the Integration Committee. The committee members and
chairpersons are shown in the above table on attendance at meetings.
See page 25
Moreover, it established a committee pursuant to section 27 (3) of
the German Industrial Co-Determination Act (“Mediation Committee”). This did not meet during the period under review. The members
of the Mediation Committee are Prof. Dr Mangold, his deputy Frank
Jakobi, Carmen Riu and Carola Schwirn.
PRESIDING COMMIT TEE
Members of the Presiding Committee:
• Prof. Dr Klaus Mangold
• Frank Jakobi
• Sir Michael Hodginson
• Andreas Barczewski
• Carmen Riu Güell
• Maxim G. Shemetov
• Anette Strempel
At its meeting on 27 October 2014, the Presiding Committee discussed the progress of the Galaxy Project with the Executive Board.
It continued the meeting without the Executive Board to determine
the reference indicators for the Executive Board’s annual performance bonus for 2014 / 15 and the personal performance factor for
the Executive Board’s annual performance bonus for 2014 / 15. It
also discussed the status of negotiations on service contracts for
Executive Board members in the event of a merger.
At its meeting on 9 December 2014, the Presiding Committee focused on an in-depth discussion of the imminent completion of the
merger. It also prepared the extension of the Executive Board service contracts for Messrs Joussen and Baier, and the conclusion of
new Executive Board service contracts for Messrs Ebel, Lundgren
and Waggott in the event of completion of the merger.
The Presiding Committee met on 9 February 2015 to discuss a number
of matters relating rto the Executive Board and its composition. The
focus was on launching an advertisement and recruitment process to
appoint an Executive Board member in charge of HR . Other issues
discussed were a female and gender quota, challenges regarding the
variable compensation of the Supervisory Board in the light of UK
Code and pay structures in the merged Company.
On 12 May 2015 the focus was on an imminent reshuffling of the
Executive Board (details see page 36, Supervisory Board and Execu
tive Board). The Presiding Committee also discussed ideas for meeting a female quota on the Executive Board, which had in the meantime
progressed further, the planned transfer of TUI Travel stock options
to TUI AG and the tax proceedings regarding Castelfalfi / Italy.
28
TO OUR SHAREHOLDERS
On 30 May 2015, using the written circulation method, the Presiding
Committee approved the role of Non-Executive Director and sub
sequently Chairman of the Board of Directors at Royal Mail PLC in
the UK , for which Mr Long had applied.
On 3 July 2015, the Presiding Committee focused on the appointment of Dr Eller as a member of the Executive Board and Labour
Director, reflecting the process that had taken place. When Dr Eller
had personally introduced herself and answered questions raised by
the members of the Presiding Committee, the Presiding Committee
felt persuaded that it should propose appointment of Dr Eller to
the Supervisory Board and authorise the Chairman to engage in
further contract negotiations. Moreover, Dr Joussen informed the
Presiding Committee about crisis management after the terrorist
attack in Tunisia.
AUDIT COMMIT TEE
Members:
• Prof. Dr Edgar Ernst
• Andreas Barczewski
• Michael Pönipp
• Timothy Martin Powell
• Prof. Christian Strenger
• Ortwin Strubelt
In the completed financial year, the Audit Committee held six ordinary
and one extraordinary meetings. For the tasks and the advisory and
resolution-related issues discussed by the Audit Committee, we refer
to the comprehensive report on page 32.
N O M I N AT I O N C O M M I T T E E
On 31 July 2015, the Presiding Committee met for a further extra
ordinary meeting. Following discussion of the final terms and con
ditions of the service contract for Dr Eller, the Presiding Committee
adopted recommendations for resolutions by the Supervisory Board.
It also started to discuss the latest information regarding a change
in the remuneration system for the fixed remuneration for the Supervisory Board and initial ideas for granting an additional cash remuneration (so-called discretionary bonus) to Executive Board members.
At a joint extraordinary meeting of the Presiding Committee and the
Nomination Committee held on 25 August 2015, there were in-depth
deliberations about the future composition of the Supervisory
Board after the close of the Annual General Meeting in 2016. The
agenda included the election of shareholder representatives to the
Supervisory Board, the future remuneration system for the Supervisory Board and the structure and potential composition of the
Committees.
The agenda for the Presiding Committee meeting on 1 September 2015 included preparatory discussions about setting a female
quota for the Executive Board, the definition of a regular limit on
length of service on the Supervisory Board and its future remuneration system, as well as the granting of an additional cash payment
to Executive Board members (so-called discretionary bonus).
On 23 September 2015, the Presiding and Nomination Committee
again met for a joint extraordinary meeting. They discussed and
prepared resolutions to be adopted by the Supervisory Board on
various matters related to the Executive and Supervisory Boards,
e. g. fixing a regular limit on length of service on the Supervisory
Board, the future remuneration system for the Supervisory Board
and an examination of the legal modalities for transitioning to a new
system, the structure and composition of the Committees and extending the option to elect an additional deputy chairman beyond
the AGM 2016. Moreover, the final resolution regarding the granting
of an additional cash payment (discretionary bonus) for Executive
Board members was discussed.
Members:
• Sir Michael Hodgkinson
• Carmen Riu Güell
• Maxim G. Shemetov
At its meeting on 27 October 2014, the Nomination Committee
focused in particular on the composition of the shareholder represen
tatives on the Supervisory Board after the planned merger and
discussed alternative scenarios in case the merger should fail.
On 9 December 2014 the agenda of the Nomination Committee included discussions of the forthcoming changes in the composition of
the shareholder representatives in the event of the merger. The
Committee resolved to propose Maxim G. Shemetov, previously only
appointed by court order, for election by the ordinary AGM 2015.
At its meeting on 9 February 2015, the Nomination Committee agreed
the process to be pursued in selecting and choosing appropriate
candidates to be proposed for election by the AGM 2016.
At its meeting on 11 May 2015, the Nomination Committee discussed
its initial ideas regarding the future composition of the shareholder
representatives on the Supervisory Board after the AGM 2016. It also
debated various facets of fixed and performance-related remuner
ation for the Supervisory Board members in the historical and cultural
context in Germany and the UK .
Regarding the extraordinary joint meeting of the Nomination Commit
tee and the Presiding Committee on 25 August 2015, we refer to
the information presented above in the section on the Presiding
Committee.
On 1 September 2015, the Nomination Committee discussed the
impact of fixing a regular limit on length of service on the Super
visory Board for the shareholder representatives. It also debated
evolving ideas about the composition of shareholder represent atives
on the Supervisory Board after the AGM 2016.
Regarding the extraordinary joint meeting of the Nomination Commit
tee and the Presiding Committee on 23 September 2015, we refer to
the information presented above in the section on the Presiding
Committee.
GAL A X Y COMMIT TEE
Members:
• Frank Jakobi
The Galaxy Committee was established by a resolution adopted by
the Supervisory Board on 3 September 2014. Its task was the final
deliberation and adoption of resolutions, where necessary, regarding
ad hoc issues in connection with the planned merger between
TUI AG and TUI Travel.
At its meeting on 24 October 2014, the Galaxy Committee focused
on preparing the EGM on 28 October 2014.
Following completion of the merger, the Galaxy Committee was
merged with the newly established Integration Committee.
I N T E G R AT I O N C O M M I T T E E
Members:
• Frank Jakobi
• Sir Michael Hodgkinson
• Timothy Martin Powell
At its meeting on 15 December 2014, the Integration Committee
discussed the deliberations of an external expert on the successful
management and completion of integration processes. The Inte
gration Committee also reviewed the integration reporting planned
by the Executive Board and synergy management for the various
work packages to be performed.
On 9 February 2015, the Integration Committee dealt with various
agenda items including a comparison of the levels of remuneration
of the executive staff of the merged company. It also held an in-depth
discussion of the report presented by the Executive Board on the
status of integration and the synergies delivered. It furthermore
adopted a resolution to commission the Deloitte company with providing external consultancy to the Integration Committee and Super
TO OUR SHAREHOLDERS
29
visory Board based on its proven expertise and experience in similar
integration projects.
On 11 May 2015, the Integration Committee discussed the report
presented by Deloitte, providing observations and recommendations
regarding the integration process. It went on to discuss the report
presented by the Executive Board on the status of integration and
synergies delivered. The Integration Committee then focused on the
Executive Board’s planned project to launch a brand strategy featuring
one common global brand for the entire Group (oneBrand project).
At its meeting on 1 September 2015, the agenda focused on the
report on the status of integration and synergies as well as cultural
issues related to integration. The Integration Committee also discussed a report presented by the Executive Board on post-merger
organisational balance at top management level.
Corporate Governance
The Supervisory Board regularly discusses corporate governance
issues at great length.
In the so-called 2.7 Announcement and the ad-hoc announcement
published on 15 September 2014, TUI AG had stated that the
Company was going to remain a German stock corporation with the
two-tier system established by the German Stock Corporation Act,
i.e. both an Executive Board and a Supervisory Board. However, due
to the primary quotation of the share on the London Stock Exchange, various provisions of the Listing Rules, Disclosure and Transparency Rules and the UK Code also have to be directly applied.
Regarding application of the German Corporate Governance Code
(DCGK ) and the UK Code, TUI AG and TUI Travel also announced
on 15 September 2014 that they were going to comply to the extend
practicable with both codes mentioned above.
For the DCGK , conceptually founded, inter alia, on the German
Stock Corporation Act, we issued an unqualified declaration of compliance for 2015 pursuant to section 161 of the German Stock
Corporation Act. By contrast, there are some deviations from the
UK Code driven for the most part by the different concepts under
lying a one-tier management system for a public listed company in
the UK (one-tier board) and the two-tier management system comprised of Executive Board and Supervisory Board in a stock corporation based on German law.
More detailed information on corporate governance, the declaration
of compliance for 2015 pursuant to section 161 of the German Stock
Corporation Act and the declaration on deviations from the UK Code
is provided in the Corporate Governance Report in the present
Annual Report, prepared by the Executive Board and the Supervisory
Board, as well as on TUI AG ’s website.
30
TO OUR SHAREHOLDERS
Audit of the annual and consolidated financial
statements of TUI AG and the Group
PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Hanover, audited the annual financial statements of
TUI AG prepared in accordance with the provisions of the German
Commercial Code (HGB ), as well as the joint management report of
TUI AG and the TUI Group, and the consolidated financial statements for the 2014 / 15 financial year prepared in accordance with
the provisions of the International Financial Reporting Standards
(IFRS ), and issued their unqualified audit certificate. The above
documents, the Executive Board’s proposal for the use of the net
profit available for distribution and the audit reports by the auditors
had been submitted in good time to all members of the Supervisory
Board. They were discussed in detail at the Audit Committee meeting of 8 December 2015 and the Supervisory Board meeting of
9 December 2015, convened to discuss the annual financial statements, where the Executive Board provided comprehensive explanations of these statements. At those meetings, the Chairman of the
Audit Committee and the auditors reported on the audit findings,
having determined the key audit areas for the financial year under
review beforehand with the Audit Committee. Neither the auditors
nor the Audit Committee identified any weaknesses in the early risk
detection and internal control system. On the basis of our own review
of the annual financial statements of TUI AG and the Group and the
joint management report, we did not have any grounds for objections
and therefore concur with the Executive Board’s evaluation of the
situation of TUI AG and the TUI Group. Upon the recommendation
of the Audit Committee, we approve the annual financial statements
for financial year 2014 / 15; the annual financial statements of TUI AG
are thereby adopted. We comprehensively discussed the proposal for
the appropriation of profits with the Executive Board and approved
the proposal in the light of the current and expected future financial
position of the Group.
Audit opinion see page 304 et seqq.
Executive Board, Supervisory Board and
committee membership
of office of Sir Michael Hodgkinson and Timothy Martin (“Minnow”)
Powell therefore expires at the close of the AGM where their acts of
management for the financial year ended on 30 September 2015 are
ratified. Sir Michael Hodgkinson was elected as additional Deputy
Chairman by the Supervisory Board at its meeting on 9 February 2015.
Upon completion of the merger, Valerie Frances Gooding, Janis Carol
Kong and Coline Lucille McConville, elected by the AGM on 28 October 2014, became members of the Supervisory Board. Their term of
office will expire at the close of the AGM where their acts of management for the financial year ended on 30 September 2019 are ratified.
Maxim G. Shemetov, only appointed by court in March 2014, was
elected for a full term of office of around five years at the AGM on
10 February 2015. His term of office will expire at the close of the
AGM where his acts of management for the financial year ended on
30 September 2019 are ratified.
Arnd Dunse was appointed managing director of TUI Deutschland
GmbH with effect from 1 December 2014. Against this background,
he stepped down before the end of his mandate from his Super
visory Board function with effect from 30 November 2014. With effect
from 3 December 2014, Wilfried H. Rau was appointed as employee
representative by the register court.
Moreover, Dr Dierk Hirschel and Marcell Witt were appointed as employee representatives on the Supervisory Board by the register
court with effect from 16 January 2015.
The terms of office of Wilfried H. Rau, Dr Dierk Hirschel and Marcel
Witt will expire upon the close of the AGM where their acts of management for the financial year ended 30 September 2015 are ratified.
PRESIDING COMMIT TEE
Vladimir Lukin, who also left the Presiding Committee when he
stepped down from the Supervisory Board, has been succeeded by
Maxim G. Shemetov, elected as a Presiding Committee member by
the Supervisory Board on 9 February 2015. Following completion of
the merger, Sir Michael Hodgkinson was additionally elected as a
Presiding Committee member on 9 February 2015.
AUDIT COMMIT TEE
The composition of the Executive Board and Supervisory Board as at
30 September 2015 is presented in the annex to the Notes. In financial
year 2014 / 15, the composition of the boards changed as follows:
SUPERVISORY BOARD
Since the completion of the merger, the Supervisory Board has
comprised 20 members in accordance with the law and the Articles
of Association. For the timing of the completion of the merger,
A ngelika Gifford and Vladimir Lukin had declared their intention
to step down early from their Supervisory Board functions. In this
context, Sir Michael Hodgkinson and Timothy Martin (“Minnow”),
elected by the AGM on 28 October 2014, succeeded them as members
of the Supervisory Board for the remaining term of office. The term
Arnd Dunse, who also left the Audit Committee when he stepped
down from the Supervisory Board, has been succeeded by Michael
Pönipp, elected as an Audit Committee member by the Supervisory
Board on 9 December 2014. Upon completion of the merger, Timothy
Martin (“Minnow”) Powell was additionally elected as an Audit
Committee member on 9 February 2015.
N O M I N AT I O N C O M M I T T E E
Vladimir Lukin, who also left the Nomination Committee when he
stepped down from the Supervisory Board, has been succeeded by
Maxim G. Shemetov, elected as a Nomination Committee member
by the shareholder representatives on the Supervisory Board on
9 February 2015. Following completion of the merger, Sir Michael
Hodgkinson was additionally elected as a Nomination Committee
member by the shareholder representatives on 9 February 2015.
The Supervisory Board thanks all members who left in financial year
2014 / 15 for their cooperation in a spirit of constructive confidence.
E XECUTIVE BOARD
Upon completion of the merger, the appointments of Messrs Ebel,
Lundgren and Waggott as Executive Board members took effect.
At the same time, the appointment of Mr Joussen was extended
before the expiry of his service contract by five years, the appointment of Mr Baier by three years and the appointment of Mr Long
until the end of the AGM 2016. None of the reappointments related
to a contract not yet having reached the last year of the ongoing
appointment period.
Mr Lundgren stepped down with effect from 30 May 2015. Mr Burling
was appointed as an Executive Board member with effect from
TO OUR SHAREHOLDERS
31
1 June 2015. On 31 July 2015, Dr Elke Eller was appointed as an
Executive Board member with effect from 15 October 2015. During
the process of searching for and selecting candidates, the Presiding
Committee and the Supervisory Board were consulted by the
specialist company Stuart Spencer and Heiner Thorborg.
Until the completion of the merger on 11 December 2014, to avoid
any conflict of interest, Mr Long did not take part in any Executive
Board meetings nor in any Supervisory Board meetings to the extent
that they entailed discussions or resolutions of issues concerning
Project Galaxy.
On behalf of the Supervisory Board
Hanover, 9 December 2015
Prof. Dr Klaus Mangold
Chairman of the Supervisory Board
32
TO OUR SHAREHOLDERS
AUDIT COMMIT TEE REPORT
Dear Shareholders,
As the Audit Committee, it is our job to assist the Supervisory Board
in carrying out its monitoring function during the financial year, particularly in relation to accounting and financial reporting for the TUI
Group, as required by legal provisions, the Corporate Governance
Code and the Supervisory Board Terms of Reference.
In addition to these core functions, we are responsible in particular
for monitoring the effectiveness and proper functioning of internal
controls, the risk management system, the Internal Audit Department
and the Legal and Regulatory compliance system.
The Audit Committee advises the Supervisory Board on who should
be proposed as external auditors at the Annual General Meeting
(AGM). Once the AGM has approved the appointment of the auditors,
the Supervisory Board then formally appoints them to conduct the
audit of the annual consolidated financial statements and the review
of the quarterly interim financial reports.
The Audit Committee consists of 7 Supervisory Board members as
follows:
•
•
•
•
•
•
•
Prof. Edgar Ernst (Chairman)
Andreas Barczewski
Prof. Klaus Mangold
Ortwin Strubelt
Michael Pönipp (since 9 December 2014)
Minnow Powell (since 9 February 2015)
On 9 December 2014, Mr Michael Pönipp replaced Mr Arnd Dunse
on the Audit Committee after the latter left the Supervisory Board.
On 9 February 2015, another member was added to the committee.
Mr Minnow Powell, previously Chairman of the Audit Committee of
TUI Travel PLC ( TUI Travel), was appointed by TUI AG ’s Supervisory
Board to its Audit Committee following the merger of TUI AG and
TUI Travel.
Both the Chairman of the Audit Committee and the remaining members of the Audit Committee are seen by the Supervisory Board to
meet the criterion of being independent. In addition to the Chairman
of the Audit Committee, at least one other member has expertise in
the field of accounting and is experienced with the use of accounting
principles and internal control systems.
The Audit Committee has six regular meetings a year; additional
meetings can also be held on specific topics. The meeting dates and
agendas are based both on the Group’s reporting cycle and on the
Supervisory Board agendas. The Chairman of the Audit Committee
reports on the work of the Audit Committee and the proposals it
makes to the Supervisory Board meeting that follows each Audit
Committee meeting.
Apart from the Audit Committee members, the meetings have been
attended by the Chairman of the Executive Board, the CFO and the
following management members, based on the topics covered:
•
•
•
•
•
Director of Group Financial Accounting
Director of Group Audit
Director of Compliance & Risk
Director of Corporate Finance
Director of Group Tax
Auditors PricewaterhouseCoopers Aktiengesellschaft (PwC) have
also been invited to meetings on relevant topics. Wherever required,
additional members of TUI Group senior management and oper
ational management have been asked to attend Audit Committee
meetings, as have external consultants.
Where it was deemed necessary to go into further detail on specific
topics or cases, the Chairman of the Audit Committee held – in add
ition to Audit Committee meetings – individual meetings with the
Executive Board, senior management or auditor representatives as
appropriate. The Chairman of the Audit Committee reported on the
key findings and conclusions from these meetings in the next Audit
Committee meeting.
Six regular Audit Committee meetings and one extraordinary meeting were held during the period under review. The members of the
committee took part in these meetings as shown in the table on
page 25.
Effects of the merger of TUI AG and TUI Travel on
the work of the Audit Committee
The merger of TUI AG with TUI Travel that took place in the period
under review through the acquisition of outstanding TUI Travel
shares had, given the significance of this transaction, a major impact
on the Group’s organisational structure. In this context, the Audit
Committee has, since the meeting in February 2015, dealt in detail
with the status of integration in the areas of Group Financial Accounting, Internal Audit and Compliance & Risk Management. The decision to elect Minnow Powell to the Audit Committee was of particular importance owing to his in-depth knowledge of TUI Travel .
We believe that the integration work in the areas mentioned above
were largely completed by the end of the financial year and that the
relevant systems were also in place in the new organisation. The
experience of both parts of the company has been brought together
according to the “best of both worlds” principle.
In addition, aspects of UK Corporate Governance have been applied
to the work of the Audit Committee insofar as possible whilst still
being in accordance with the relevant regulations of a German stock
company. As far as possible, this has taken into account – earlier
than required – specific European Union regulations affecting the
future work of audit committees.
Reliability of financial reporting and monitoring
of accounting process
In a German stock corporation the Executive Board is responsible
for drafting the Annual Report & Accounts (AR A ). According to S.
243 para. 2 of the German Commercial Law (Handelsgesetzbuch)
the AR A must be clearly arranged and should mirror a realistic picture of the Company’s economic situation. This is equivalent to the
UK -Code requirement for the AR A to be fair, balanced and understandable – although this assessment has not been delegated to the
Audit Committee (C3.4) – and the Executive Board is comfortable
that this AR A satisfies both requirements.
In order to ensure ourselves of the reliability of both the annual financial statements and interim (quarterly) reporting, we have requested that the Executive Board inform us in detail about the
Group’s operational performance and its financial situation. This was
done in the four Audit Committee meetings that took place directly
before the financial statements in question were published. In these
meetings, the relevant reports were discussed and the auditors also
reported in detail on key aspects of the financial statements and on
the findings of their audit or review of those financial statements.
TO OUR SHAREHOLDERS
33
In order to monitor accounting, we examined individual aspects in
great detail, particularly areas, areas impacted by the merger of
TUI AG and TUI Travel. In addition, the accounting treatment of key
balance sheet items, such as goodwill, touristic prepayments, pension
provisions, other provisions, including maintenance provisions, income
taxes were reviewed. In each case we reviewed the underlying data
and confirmed that the judgements were reasonable and in acceptance with the auditor’s view. Moreover the implementation of new
IFRS s, material litigations and key accounting issues arising from the
operating businesses were assessed by the Audit Committee.
In the period under review, we concerned ourselves with the following individual subjects:
Effects and accounting treatment arising from the acquisition of the
outstanding shares in TUI Travel by TUI AG , in particular the accounting for equity and debt financing measures, the allocation of goodwill, the capitalisation of tax losses to be carried forward, segment
reporting and the necessary reporting obligations in accordance with
the provisions of the UK Corporate Governance code. Topics discussed
also included the going concern analysis prepared by the Company
to support the going concern statements in the half-year and year-end
financial statements, and the additional Viability Statement made in
the Annual Report which is a new requirement this year under the
UK Corporate Governance Code.
As part of the continuation of the Castelfalfi development project in
Italy, the Audit Committee received regular reports on the status of
the business and management’s considerations regarding the safeguarding of the value of the investment in the long term. The writedown of the book value that was effected for the annual financial
statements was discussed in detail. In connection with this project,
the Audit Committee received in an extraordinary meeting in June a
report on the settlement of tax proceedings brought by the Italian
authorities against the business.
The August meeting included reports on both the effects of the
terrorist attacks in Tunisia and the Greek financial crisis on the
Company’s operations and financial position.
The valuation logic with regard to the Hapag-Lloyd AG shares was
discussed in detail on numerous occasions in the course of the
financial year, and particularly at the year end with respect to the
impairment that has been booked due to the current market situ
ation of the container shipping industry.
The consistency and logic of the reconciliation from profit before tax
to the key figure “underlying earnings” was discussed for all quarterly reports and the year-end financial statements.
34
TO OUR SHAREHOLDERS
The operating performance of the joint venture in Russia was also
subjected to critical appraisal during the year.
Our evaluation of all discussed aspects of accounting and financial
reporting has been in line with that of both management and the
Group auditors.
The consolidated financial statements and summarised management
report for the TUI Group and the annual financial statements for
the TUI AG entity as at 30 September 2014 were the subject of a
random audit during 2015 by the German Financial Reporting Enforcement Panel (DPR ). The Audit Committee concerned itself with the
progress of the audit several times during the year. The audit came
to an end on 30 September 2015 without any errors or other material
findings being identified.
Effectiveness of internal controls and
the risk management system
The Audit Committee recognises that a robust and effective system
of internal control is critical to achieving reliable and consistent business performance. To fulfil its monitoring function, the Audit Committee is informed regularly about the current status of internal
controls and the risk management system and also about the further
development of them.
The Group has continued to evolve its internal control framework
which is underpinned by the COSO concept. In recent years the larger
businesses in the Group have completed documentation of their main
financial processes and regular testing by management of the key financial controls as a matter of routine is the next area of development.
The Group continues to have separate Compliance teams for the
functions of Finance, Legal & Regulatory and IT, and these teams
play a crucial role in improving controls across the Group and iden
tifying areas where more focus is required. The Group auditors also
report to us on any weaknesses they find in the internal control
system of individual Group companies, and management tracks
these items to ensure that they are addressed on a timely basis.
The Audit Committee receives regular reports on the performance
and effectiveness of the risk management system, as noted in the
Risk Report on page 97. It is noted that the Risk Oversight Committee
(ROC ) is an important management committee within the Group
and we are satisfied that there is appropriate, active management of
risk throughout the Group.
The Internal Audit Department ensures the independent monitoring
of implemented processes and systems and reports directly to the
Audit Committee on a quarterly basis. In the period under review,
the Audit Committee was not provided with any audit findings indicating material weaknesses in the international control system or
risk management system. In addition talks are held regularly between
the Chairman of the Audit Committee and the Director of Internal
Audit for the purposes of closer consultation and each year the internal audit plan is presented to the Audit Committee, discussed and
approved. These regular points of contact give the Audit Committee
comfort that the Internal Audit Department is working effectively.
Prior to the merger, TUI Travel’s Internal Audit Department was also
assessed for effectiveness by an external third party to give additional comfort. While an external effectiveness review has not taken place
in 2015, due to the completion of the merger and the organisational
changes which followed, it is our intention to resume the external
reviews from 2016.
During the year, in addition to the reporting on the core elements of
the internal control and risk management system, we received reports
on the status of the Legal & Regulatory Compliance systems, on the
Group’s hedging transactions (including the guidelines on which these
are based), on insurance management, the status of IT security and
individual crisis management processes.
Whistleblowing for staff members in case of
potential impropriety
Across the Group, systems are implemented which allow staff members to raise concerns about infringements of groupwide compliance standards. As part of the Legal Compliance reporting, we received information about the status of the integration of the exisiting
whistleblowing systems and the material notifications throughout
the financial year.
Examination of auditor independence and
objectivity
In December 2014 the Audit Committee recommended to the Supervisory Board that it propose the existing auditors PwC to the Annual
General Meeting as auditors for financial year 2014 / 15. PwC has
audited the TUI Group for more than 20 years and the Audit Committee has always held PwC’s work to be of high quality. Whilst the
last time that the Group audit was put out to tender was in financial
year 2008, it did not seem appropriate to issue an invitation to tender
in financial year 2014 / 15 due to the completion of the merger and
the extra accounting complexity it created. It is noted that, in accord
ance with the EU regulation 537 / 2014 governing the rotation of
a uditors, it was decided to put the Group audit out to tender in
financial year 2015 / 16 for the financial statements as at 30 September 2017.
Following the approval of PwC as auditors by the Annual General
Meeting in February 2015, the Supervisory Board appointed PwC
with the task of auditing the 2014 / 15 annual financial statements
and reviewing the interim financial statements. The Audit Committee discussed with PwC their audit plan for this year’s annual financial statements, including the main companies to be audited from the
Group’s perspective and the key areas of focus for the audit. Based
on this, the Audit Committee firmly believes that the audit has taken
into account the main financial risks to an appropriate degree and is
satisfied that the auditors are independent and objective in how they
conduct their work. The Group audit fee was also discussed and
again we are comfortable that it has been set at an appropriate level.
Through this regular engagement with the auditors, we are able to
satisfy ourselves that the external audit process is effective.
Where the auditor has performed services that do not fall under the
scope of the Group audit, the nature and extent of these services have
been explained to the Audit Committee. In financial year 2014 / 15,
these non-audit services accounted for 38 % of the auditor’s fees,
which totalled € 18.6 m. The non-audit fees included services incurred
in relation to the merger. Excluding those merger related fees the
ratio would have been 17 %. Together with management, we have
TO OUR SHAREHOLDERS
35
discussed guidelines for approving non-audit services, which comes
into force in financial year 2015 / 16. These take into account the
requirements from the regulations of EU regulation 537 / 2014 on
prohibited non-audit services and on limitations of the scope of
non-audit services.
I would like to take this opportunity to thank the Audit Committee
members, the auditors and the management for their hard work
over the past financial year.
Prof. Edgar Ernst
Chairman of the Audit Committee
36
TO OUR SHAREHOLDERS
Annex to the Notes
SUPERVISORY BOARD
Name
Function / Occupation
Location
Chairman of the Supervisory Board of TUI AG
Chairman of the Supervisory Board of Rothschild GmbH
Stuttgart
Frank Jakobi1
Deputy Chairman of the Supervisory Board of TUI AG
Travel Agent
Deputy Chairman of the Supervisory Board of TUI AG
Hamburg
Aircraft Captain
Regional Head of the Special Division
of ver.di – Vereinte Dienstleistungsgewerkschaft
Head of Group Controlling Department of TUI AG
President of Deutsche Prüfstelle für Rechnungslegung (DPR )
Hanover
Hamburg
President Hewlett Packard Germany,
Vice President HP Software Germany
Member of supervisory bodies in different companies
Kranzberg
(since 12 December 2014)
Andreas Barczewski 1
Peter Bremme1
Arnd Dunse1 (until 30 November 2014)
Dr Dierk Hirschel1 (since 16 January 2015)
London
Bad Nenndorf
Berlin
Weybridge
Business unit manager of the trade-union ver.di –
Vereinte Dienstleistungsgewerkschaft
Berlin
Senior Vice President Legal Affairs, OAO Severstal
First Deputy CEO , ZAO Sever Group
First Deputy CEO , OOO Kapital
Moscow
Coline Lucille McConville
London
Michael Pönipp1
Hotel Clerk
Hanover
Timothy Martin Powell
Wilfried H. Rau1 (since 3 December 2014)
Carmen Riu Güell
London
Director Group Audit
Entrepreneur
Hanover
Palma de Mallorca
Berlin
Maxim G. Shemetov
Anette Strempel1
Department Coordinator in the Transportation Division
of ver.di – Vereinte Dienstleistungsgewerkschaft
Head of Investment Management, Travel Sector, ZAO Sever Group
Travel Agent
Member of Supervisory Boards
Ortwin Strubelt1
Travel Agent
Referee of Group and European Works Councils of TUI AG
Hamburg
Janis Carol Kong
Carola Schwirn1
London
Moscow
Hemmingen
Frankfurt / Main
1
Representative of the employees
refers to 30 September 2015 or date of resignation from the Supervisory
Board of TUI AG in financial year 2014 / 15.
Chairman
Deputy Chairman
2Information
3
4
Initial Appointment
Appointed until AGM Other Board Memberships 2
7 Jan 2010
2016
15 Aug 2007
2016
12 Dec 2014
2016
10 May 2006
2 July 2014
2016
2016
1 Oct 2008
9 Feb 2011
2016
a) Alstom AG 3
Continental AG
TO OUR SHAREHOLDERS
37
a)Membership in supervisory boards within the meaning of section 125 of the German
Stock Corporation Act (AktG)
b)Membership in comparable German and non-German bodies of companies within the
meaning of section 125 of the German Stock Corporation Act (AktG)
Name
b) Alstom S. A.
Baiterek Holding JSC
Ernst & Young
Rothschild GmbH 3
Swarco AG 4
Frank Jakobi1
b) Keolis (UK ) Limited3
Keolis Amey Docklands Ltd.
Andreas Barczewski 1
Peter Bremme1
a) TÜV Nord AG
Arnd Dunse1 (until 30 November 2014)
a) Deutsche Postbank AG
DMG Mori AG
VONOVIA SE
Wincor Nixdorf AG
a) ProSiebenSat.1 Media SE
26 March 2012
12 Dec 2014
2020
16 Jan 2015
2016
12 Dec 2014
2020
12 Feb 2014
12 Dec 2014
2020
17 April 2013
2016
b) Rothschild & Co
(former Paris Orléans SCA )
b) Premier Farnell 3
Vodafone PLC
a) DZ Bank Gruppe
b) Copenhagen Airport
Network Rail Infrastructure Limited
Network Rail Limited
b) OAO AB Rossiya
OAO Severstal
OJSC Power Machines
OOO T2 RTK Holding
b) Fever-Tree Drinks plc
Travis Perkins plc
UTV Media PLC
a) TUI Deutschland GmbH
Bristol Airport Ltd.
Kingfischer PLC
Portmeirion Group PLC
South West Airports Ltd.
ZAO National Media Group
ZAO Sveza
ZAO Video International
Dr Dierk Hirschel1
(since 16 January 2015)
Janis Carol Kong
Inchape PLC
b) MER -Pensionskasse V. V. a. G.
Michael Pönipp1
TUI BKK
b) Computacenter PLC
Supergroup PLC
b) Hotel San Francisco S.A.
Riu Hotels S.A.
RIUSA II S.A.
Timothy Martin Powell
Wilfried H. Rau1 (since 3 December 2014)
Carmen Riu Güell
12 Dec 2014
2016
3 Dec 2014
14 Feb 2005
2016
2016
1 Aug 2014
2016
Carola Schwirn1
14 March 2014
2 Jan 2009
9 Feb 2011
2020
2016
2016
Maxim G. Shemetov
Anette Strempel1
3 April 2009
16 Jan 2015
2016
2016
Productores Hoteleros
Reunidos, S.A.
a)Deutsche Asset & Wealth Management b) The Germany Funds, Inc.3
Investment GmbH
Ortwin Strubelt1
38
TO OUR SHAREHOLDERS
Annex to the Notes
EXECUTIVE BOARD1
Name
Department
Friedrich Joussen
(Age 52)
Member of the Executive Board since Oct 2012,
CEO of the Executive Board from Feb 2013,
Joint CEO since Dec 2014
Current appointment until Oct 2020
Peter Long
(Age 63)
Member of the Executive Board since 2007,
Joint CEO since Dec 2014
Current appointment until Feb 2016
Joint CEO
Joint CEO
Horst Baier
Finance
(Age 58)
Member of the Executive Board since 2007
Current appointment until Nov 2018
David Burling
Northern Region
(Age 47)
Airlines
Member of the Executive Board since June 2015 Hotel Purchasing
Current appointment until May 2018
Sebastian Ebel
(Age 52)
Member of the Executive Board since Dec 2014
Central Region
Hotels
Cruises
TUI Destination Services
Other Board Memberships
a) Hapag-Lloyd AG
Leibniz-Service GmbH
TUI Deutschland GmbH
TUI fly GmbH
b) Sunwing Travel Group Inc.
TUI Canada Holdings Inc.
TUI Travel Ltd.
TUI UK Ltd.
TUI UK Transport Ltd.
a) TUI Cruises GmbH
TUI fly GmbH
b) Beaumont Film Partnership LLP
NRL Properties LLP
Royal Mail PLC 2
The Close Film Sale and Lease Back
(2003/4) No 2 LLP
The Family Holiday Association
TUI Nederland Holding N.V.
TUI Travel Belgium N.V.
b) RIUSA II S.A.2
Sunwing Travel Group Inc.
TUI Canada Holdings Inc.
The Family Holiday Association
BRW Beteiligungs AG 2
EVES Information Technology AG 2
Eintracht Braunschweig
GmbH & Ko.KG aA2
IT
HR and Labour Director
Johan Lundgren
(Age 49)
Member of the Executive Board from
Dec 2014 until May 2015
William Waggott
(Age 52)
Member of the Executive Board since Dec 2014
1Information
2
Mainstream
(Organisational
structure until May 2015)
b) TUI Mostravel
Specialist Group
Hotelbeds Group
b) Atlantica Golden Resorts Ltd.
Bella Vista EAD
First Choice Holidays & Flights Ltd.
First Choice Holidays Ltd.
Isango Ltd.
Meetings & Events UK Ltd.
Preussag UK Ltd.
TUI Travel Holdings Ltd.
TUI Travel Ltd.
refers to 30 Sep 2015 or date of resignation from the Excecutive Board
in financial year 2014 / 15.
Chairman
Hotelbeds UK Ltd.
Thomson Travel Group (Holdings) Ltd.
Travel Choice Ltd.
Travel Scot World Ltd.
Trina Group Ltd.
TTG (Jersey) Ltd.
TUI Aviation GmbH 2
TUI Travel Belgium N.V.
TUI Nederland Holding N.V.
TUI Travel Group Management
Services Ltd.
TUI Travel Amber Ltd.
a)Membership in Supervisory Boards required by law within the meaning of section 125
of the German Stock Corporation Act (AktG)
b)Membership in comparable Boards of domestic and foreign companies within the
meaning of section 125 of the German Stock Corporation Act (AktG)
TO OUR SHAREHOLDERS
39
C O R P O R AT E G O V E R N A N C E
Corporate Governance Report / Statement on Corporate Governance
(as part of the Management Report)
The actions of TUI AG ’s management and oversight bodies are
determined by the principles of good and responsible corporate
governance.
(e. g. the Listing Rules and the Disclosure and Transparency Rules)
for foreign companies such as TUI AG and its Annual Report.
In this chapter, the Executive Board and the Supervisory Board provide their report on Corporate Governance in the Company pursuant
to sub-section 3.10 of the German Corporate Governance Code and
section 289a of the German Commercial Code (HGB ).
UK Corporate Governance Code is available at: www.frc.org.uk
German Corporate Governance Code see at www.dcgk.de
Declaration of Compliance pursuant to section 161
of the German Stock Corporation Act (AktG)
The Executive Board and the Supervisory Board comprehensively
discussed corporate governance issues in financial year 2014 / 15 and
jointly submitted the declaration of compliance for 2015 in December 2015, pursuant to section 161 of the German Stock Corporation
Act. The declaration was made permanently accessible to the general
public on TUI AG ’s website in December 2015.
In accordance with Listing Rule 9.8.7R and Listing Rule 9.8.6R (6),
the Executive Board and the Supervisory Board therefore declare
as follows:
UK Corporate Governance Statement
“Throughout the reporting period, the Company has complied with
the provisions of the UK Code, including its main principles, except
in respect of the departures set out and explained below.
Since we submitted our last Declaration of Compliance in December 2014, we complied with the recommendations of the Code in its
version of 24 June 2014. In future, all recommendations of the Code
in its new version of 5 May 2015 will be observed.”
TUI AG confirmed in the documentation for the merger of TUI AG
and TUI Travel PLC sent to shareholders before the merger that it
intended to adhere to both the UK Code and the German Corporate
Governance Code (German Code) to the extent practicable. During
the year, compliance with both the UK and German Codes was reviewed, taking into account that TUI is a German company subject
to German law. In many respects, the requirements of the two Codes
are similar, but there are certain aspects which are not compatible
(in some cases due to the different legal regimes for German and UK
companies) and so some deviations from best practice in the UK
have been necessary.
The current and all previous declarations of compliance have been made permanently available on the web at: www.tuigroup.com/en-en/investors/corporate-
governance/declaration-of-conformity
It is important to understand that (as explained in the merger documentation) under the German Stock Corporation Act, the legislation
applicable to TUI AG , a two-tier board system is mandatory. This
means that two separate boards must be established by law:
W O R D I N G O F T H E D E C L A R AT I O N O F C O M P L I A N C E F O R 2 0 15
“In accordance with section 161 of the German Stock Corporation
Act, the Executive Board and Supervisory Board of TUI AG hereby
declare:
U K C O R P O R AT E G O V E R N A N C E C O D E
For the first time, the Executive Board and the Supervisory Board
also provide a report on the Corporate Governance Code of the
United Kingdom (“ UK Code”). In the framework of its merger announcements, TUI Travel PLC ( TUI Travel) and TUI AG had announced that they were going to comply also with the UK Code to
the extend practicable. Moreover, due to its listing in the London
Stock Exchange, various UK provisions are also directly mandatory
• The Executive Board (Vorstand), which is responsible for running
the Company. It is headed by the CEO (or in case of TUI AG
currently by two Joint CEO s). The Executive Board members can
broadly be compared to the Executive Directors in a UK company.
• The Supervisory Board (Aufsichtsrat), which is responsible for
the supervision of the Executive Board, and is headed by its
Chairman. The Supervisory Board members can broadly be compared to the non-executive directors in a UK company.
40
TO OUR SHAREHOLDERS
This two-tier board structure is different to the UK unitary board
structure on which the UK Code is based. Some of the principal
structures and procedures of the boards of a German company are
also different to a UK company (for example, there is no Company
Secretary). For this reason the Company has explained below circumstances where it considers not to comply. Furthermore the Company
has explained where it considers not to be compliant in the legal
sense, but with the spirit of the UK Code. In these cases the Company has explained its considerations for a better understanding of
investors. Sub-headings refer to sections of the UK Code for ease of
reference for investors.
I D E N T I F I C AT I O N O F S E N I O R I N D E P E N D E N T D I R E C T O R ( A1 . 2 )
Under German law and the German Code, there is no concept of a
“Senior Independent Director”. Instead, shareholders may raise any
issues at the Annual General Meeting (AGM ). In this forum, the
E xecutive Board and, with respect to certain matters, the Chairman
are available to address any issues and are legally obliged to provide
adequate responses.
Outside the AGM, and where contact through the normal channels of
the Executive Board and in particular with the Chief Executive and
the Chief Financial Officer has failed to resolve an issue or where such
contact is deemed inappropriate, the Chairman or any of his Deputies
may be approached. Sir Michael Hodgkinson, who was the Deputy
Chairman and Senior Independent Director of TUI Travel PLC before the merger, was appointed Second Deputy Chairman of the
Company in February 2015 alongside Frank Jakobi (First Deputy
Chairman who, according to the German Co-Determination Act,
must be an Employee Representative). The role of Second Deputy
Chairman was introduced following the merger and will remain for
the foreseeable future.
DIVISION OF RESPONSIBILITIES – CHAIRMAN & CHIEF
E X E C U T I V E S ( A 2 .1)
The separation of the roles of the Chairman of the Supervisory
Board (Prof. Klaus Mangold) and the two Co-Chief Executives
(Friedrich Joussen and Peter Long) is clearly defined under German
law as part of the two-tier board structure. Therefore, no further
division of responsibilities is required and both the Executive Board
and the Supervisory Board consider that the Company complies
with the spirit of the UK Code.
In the UK there is no concept of Employee Representatives and the
UK Code only envisages shareholder representatives on the Board
as Non Executive Direstors. Therefore, the Company’s approach is to
exclude Employee Representatives from its independence disclosures
(for a detailed explanation of Shareholder and Employee Representations, please see below).
The Supervisory Board has determined that seven of its nine members from the shareholder representatives (excluding the Chairman
as required by the UK Code) are independent for the purposes of the
UK Code and that the Chairman was independent on appointment
in 2011 and is still considered independent (Prof. Mangold also was
independent when he became member of the Supervisory Board in
January 2010). The shareholder representatives of the Supervisory
Board considered to be independent are: Prof. Edgar Ernst, Val
Gooding, Sir Michael Hodgkinson, Janis Kong, Coline McConville,
Minnow Powell and Prof. Christian Strenger.
The members of the Supervisory Board not considered to be independent for the purposes of the UK Code are Carmen Riu Güell
and M
axim Shemetov.
In reaching its determination, the Supervisory Board has considered
in particular the factors set out below.
P E R F O R M A N C E - R E L AT E D PAY
All Supervisory Board members currently receive a performance-
related pay element in addition to their fixed pay. This variable
element was resolved upon by shareholders at the 2013 AGM and
was in line with a specific recommendation of the German Code at
that time. In practice, the variable element is not substantial when
compared to the level of fixed compensation (for further details see
page 70 of the Directors’ Remuneration Report). In these circumstances, the Supervisory Board considers that the variable pay
element does not affect its members’ independence for the purposes of the UK Code.
Moreover, as the recommendation in the German Code has now been
withdrawn, and there is a tendency of German companies for
Supervisory Board members to receive fixed remuneration only, it is
intended to propose a resolution at the 2016 AGM to replace the
performance-related pay element with a fixed fee only and thereby
to comply with the UK standards of good corporate governance.
I N D E P E N D E N C E O F S U P E R V I S O R Y B O A R D M E M B E R S ( B 1 .1)
Under the UK Code, the Board must identify in the annual report each
non-executive director it considers to be “independent” for the purposes of the UK Code. As explained above, all members of the Supervisory Board are considered to be non-executive directors for the
purposes of the UK Code. Under the UK Code, “independent” means
that the relevant individual is independent in character and judgement
and that there are no relationships or circumstances which are likely
to affect, or could appear to affect, the individual’s judgement.
S H A R E H O L D E R A N D E M P L O Y E E R E P R E S E N TAT I V E S
The Supervisory Board of TUI AG consists of ten members who are
elected by shareholders at AGM s (the “Shareholder Representatives”) and ten members who represent the employees of TUI AG
(the “Employee Representatives”). This differs from UK practice
where only those board members representing major shareholders
are typically referred to as “Shareholder Representatives” and are
not considered independent under the UK Code because of their
link to a significant shareholder.
In TUI AG , only Carmen Riu Güell and Maxim Shemetov are connected to significant shareholders, namely Riu Hotels (circa 3.4 %)
and Alexey Mordashov (circa 15.0 %) respectively. It should also be
noted that joint ventures exist between TUI AG and both Riu Hotels
and TUI Russia (its majority is controlled by Mr Mordashov) (for
further details page 157 of the Annual Report). Therefore, neither
Ms Riu Güell nor Mr Shemetov is considered “independent” for the
purposes of the UK Code.
Sir Michael Hodgkinson was a Non-Executive Director of
TUI Travel PLC before the merger with TUI AG . He had also been on
the Board of First Choice Holidays PLC since 2004 (which merged
with the Tourism Division of TUI AG to form TUI Travel PLC in
2007). However, these appointments were to legally different
Boards responsible for only part of the current Group and are
therefore not included when considering his length of service on
the TUI AG Supervisory Board. It is also noted that Sir Michael
Hodgkinson was elected to the Supervisory Board by Shareholders
in connection with the merger.
The Employee Representatives of the Supervisory Board are elected
by TUI AG ’s workforce. Three Employee Representatives are nominated by a German workers’ union (the ver.di).
Under the UK Code, directors who are or have been an employee of
the Group in the last five years or who participate in the Group’s
pension arrangements would generally not be considered independent. In the UK , directors with an employment relationship are normally current or former executives. By contrast, under German law,
Employee Representatives of the Supervisory Board must be employees of the Group, and must be elected by the employees without
any involvement of the Executive or Supervisory Boards. In addition,
their employment agreement may be terminated while they are
Employee Representatives only in exceptional circumstances.
The Employee Representatives may also participate in Group pension
schemes as is normal for employees and in their capacities as employees.
Union representatives are nominated, and employed by, the Union
but are still classified as Employee Representatives. The Union
representatives are nominated, and may only be removed from
the Supervisory Board, by their respective Union and neither the
Executive nor the Supervisory Board has any role in their appointment
or removal.
TO OUR SHAREHOLDERS
41
HALF THE BOARD SHOULD BE INDEPENDENT NON-E XECUTIVE
DIREC TOR S (B1. 2)
Considering for the purpose of the UK Code only the Shareholder
Representatives on the Supervisory Board, more than half of its
members are independent.
N O M I N AT I O N C O M M I T T E E – C O M P O S I T I O N A N D
R E S P O N S I B I L I T I E S ( B 2 .1)
The role of the Nomination Committee in a typical UK company is
fulfilled in the Company by two Committees of the Supervisory
Board: Under the Rules of Procedure for the Supervisory Board and
its Committees (which are equivalent to the Terms of Reference in
the UK ) the Nomination Committee considers and proposes suitable
candidates for election as Shareholder Representatives of the Super
visory Board. The Presiding Committee determines the requirements
and remuneration for any new appointments to the Executive Board
and recommends suitable candidates to the Supervisory Board. On
this basis the Supervisory Board appoints Executive Board members.
This is different from the UK where all director apointments are
approved by shareholders at the AGM .
However, as is common practice in Germany, at each AGM shareholders are asked to decide whether they approve the actions of the
Executive Board and Supervisory Board Members during the past
financial year. At the AGM 2015, the first following the merger, the
Company changed its procedure to allow a separate vote on each
individual Executive Board and Supervisory Board member, in the
light of UK practice. The Company intends to continue this practice.
Accordingly, the Supervisory Board considers that the Company
complies with the spirit of the UK Code to the extent practicable.
There is no requirement under German law or the German Code for
the majority of the Nomination Committee members to be “independent”. Of the four members of the Nomination Committee, two
are representatives of significant shareholders (Carmen Riu Güell and
Maxim Shemetov) and so not independent for the purposes of the
UK Code. The remaining two members are Sir Michael Hodgkinson
and Prof. Klaus Mangold (Chairman) who are both independent.
Therefore TUI AG is not compliant with the UK Code which requires
a majority of the Nomination Committee to be independent. However,
the Company considers that the current membership of the Nomination Committee provides a strong and experienced pre-selection
of Supervisory Board members, while keeping the Committee to a
manageable size.
The Rules of Procedure for the Supervisory Board and its Committees are currently under revision and will be finalised within H1 of
the financial year 2015 / 16. Afterwards the Supervisory Board will
42
TO OUR SHAREHOLDERS
decide whether they will be made available for the public. Therefore
the Company is currently not compliant with this part of the Code
provision (and part C3.3 as far as the public availability of the Rules
of Procedure for the Audit Committee is concerned).
Succession planning for management below Executive Board level is
driven by the Executive Board. The Presiding Committee is responsible for succession planning for the Executive Board only and a
presentation on talent management and succession planning was
given to the Presiding Committee during the year.
LENGTH OF TENURE FOR NON-E XECUTIVE DIREC TOR S (B2.3)
In accordance with German law and common practice, Shareholder
Representatives are generally elected for five-year terms. Employee
Representatives are also generally elected for five years. Therefore,
neither Executive nor Supervisory Board Members are re-appointed
annually by shareholders and so TUI AG does not comply with this
provision of the UK Code.
Under the UK Code, any term beyond six years should be subject to
rigorous review and a term extending beyond nine years could affect
the independence of a Non-Executive Director. However, in the
German Corporate Governance context, a longer length of service is
quite normal as Supervisory Board members are usually elected for
five years and regular re-election is common.
A N N U A L R E - E L E C T I O N B Y S H A R E H O L D E R S AT T H E A G M ( B 7.1)
None of the Executive or Supervisory Board members is re-elected
annually. However, as noted above, in light of the UK Code and UK
practice, the Company voluntarily puts individual resolutions
approving the actions of each Executive and Supervisory Board
member in the previous financial year to the last AGM and intends
to continue this practice.
Supervisory Board member´s appointments expiring at the AGM
2016 are disclosed in the table following the Chairman´s letter on
page 36. In respect of the Shareholder Representatives, the Supervisory Board proposes the re-election of Prof. Dr Klaus Mangold, Sir
Michael Hodgkinson, Carmen Riu Güell and Prof. Dr Edgar Ernst.
Peter Long and Angelika Gifford will also be proposed for election by
the shareholders. Maxim Shemetov has confirmed his intention to
resign from the Supervisory Board provided that Alexey Mordashov
is elected at the AGM 2016.
N O M I N AT I O N C O M M I T T E E S E C T I O N O F T H E A N N U A L
REPORT & ACCOUNTS (B2.4)
See page 30 for the activities of the Nomination Committee which
forms part of the Chairman’s letter to shareholders.
During the year, neither a search consultancy nor external advertisements were used for any Supervisory Board appointments. The
proposals for the new members were part of the merger terms
designed to ensure a balance of interests and knowledge for the
new combined group and appropriate diversity.
TERMS & CONDITIONS OF APPOINTMENTS OF NON-E XECUTIVE
DIREC TOR S (B3. 2)
The terms and conditions of Supervisory Board members’ appointments follow the provisions of the German Stock Corporation Act
and the Articles of Association of the Company. The Articles are available on the website www.tuigroup.com/en-en/investors/corporate-
governance.
E X TERNAL NON-E XECUTIVE /CHAIRMAN ROLE S (B3.3)
Peter Long was appointed as a non-executive director and Chairman-
designate of Royal Mail PLC with effect from 8 June 2015 and the
appointment was approved at its Annual General Meeting on
23 July 2015. He took over the role of Chairman with effect from
1 September 2015. This appointment overlaps with his position of
Joint CEO of TUI AG for a short period which is a point of non-
compliance with the UK Code. However, Peter Long intends to
step down as Joint CEO as of the end of the AGM in February 2016,
and his proposed appointment to the Supervisory Board will be put
to a shareholder resolution at the AGM for approval.
A D V I C E A N D S E R V I C E S O F T H E C O M PA N Y S E C R E TA R Y ( B 5 . 2 )
There is no specific role of Company Secretary in German companies.
However, Executive and Supervisory Board Members have access to
the Board Office (with team members in Germany and the UK ) if
they need any advice or services. The Board Office acts as an interface for corporate matters for the Executive and Supervisory Board
members and is responsible for ensuring that the requisite processes and procedures are in place governing all Executive and Super
visory Board meetings (i.e. preparation of agendas, minuting of
meetings and ensuring compliance with German and UK law as appropriate). The Board Office also supports the Chairman, the
Joint CEO s, the CFO and the Chairman of the Audit Committee.
Executive and Supervisory Board members also have access to
legal advice via the Group Legal Director and the Board Office generally. The Supervisory Board can also approach the Executive Board
directly for specific advice on any matters. Accordingly, the Executive Board and the Supervisory Board consider that the Company
complies with the spirit of the UK Code.
B O A R D P E R F O R M A N C E E V A L U AT I O N ( B 6 )
The individual Executive Board member’s performance is evaluated
annually by the Supervisory Board for the annual variable bonus. In
this context, the Supervisory Board also reviews the individual’s
overall performance as part of the Executive Board. However, no
external performance evaluation is done for the Executive Board
and this would be highly unusual in Germany.
In respect of the Supervisory Board’s performance, it is not customary to conduct annual reviews of effectiveness. Each Supervisory
Board Member can give feedback to the Chairman, the Deputy
Chairmen or the Supervisory Board as a whole as and when appropriate or required.
External evaluation is limited to Supervisory Board members and is
performed by means of individual interviews and anonymous reviews.
Consolidated results are shared with the entire Supervisory Board
and appropriate actions suggested and discussed as appropriate.
The last external review of the Supervisory Board was undertaken
during 2013 by Board Consultants International and the current
external review commenced in September 2015. Board Consultants
International has no other connection with the Company.
The appraisal of the Chairman of the Supervisory Board is covered
during the external evaluation process and Executive Board members
are invited to contribute to the process.
F A I R , B A L A N C E D A N D U N D E R S TA N D A B L E A N N U A L R E P O R T
A N D A C C O U N T S ( C1 .1)
In a German stock corporation the Executive Board is responsible
for drafting the Annual Report & Accounts (AR A ). According to
S. 243 para. 2 of the German Commercial Law (Handelsgesetzbuch)
the AR A must be clearly arranged and should mirror a realistic
picture of the Company’s economic situation. This is equivalent to
the UK Code requirement for the AR A to be fair, balanced and
understandable – although this assessement has not been delegated
to the Audit Committee (C3.4) – and the Executive Board is comfortable that this AR A satisfies both requirements.
E S TA B L I S H M E N T A N D O P E R AT I O N O F R E M U N E R AT I O N
C O M M I T T E E ( D 2 ) , R E M U N E R AT I O N ( D 1)
In the German governance structure there is no separate Remuneration Committee. The remuneration of the Executive Board is
agreed by the Supervisory Board based on recommendations from
the Presiding Committee, which is governed by the Supervisory
Board Rules of Procedure , as referred to above.
Supervisory Board and Committee remuneration is governed by
the Articles of Association as resolved upon by the shareholders at
the AGM .
There are no clawback or malus provisions which work in exactly the
same way they would in the UK in the service contracts of Executive
Board members and this would be unusual in Germany. However,
there are different contractual and statutory provisions that may
allow for a reduction or forfeiture of remuneration components or
TO OUR SHAREHOLDERS
43
allow the company to recollect damages from Executive Board
members. First, the service contracts of Executive Board members
provide for forfeiture of the annual performance-based remuneration
and the LTIP if the company terminates the service contract for
cause without notice before the end of the one year performance
period in case of the annual performance-based remuneration or
before the end of the respective performance reference period
regarding the LTIP. Second, the Supervisory Board may, under
certain exceptional circumstances, reduce Executive Board compensation in case of a deterioration of the economic situation of the
company. Third, Executive Board members may be liable for damages
under German Corporate Law in case of a breach of duties of care
and fiduciary duties.
See page 50 et seqq. of the Directors’ Remuneration Report for full
details on Executive and Supervisory Board member´s remuneration.
C O M P E N S AT I O N C O M M I T M E N T S I N E X E C U T I V E D I R E C T O R S ’
SE RVICE CONTR AC T S (D1.4)
The principles that apply for departing Executive Directors are
detailed in the Directors´ Remuneration Report (see page 62). The
terms are already agreed in the Executive Directors’ contracts of
employment as approved by the Supervisory Board taking into
account the various circumstances in which a director may leave. These
include maximum limits on the amounts payable on termination.
Given that in Germany contracts are issued for a fixed term, termin
ation payments may be greater than the one year recommended in
the UK Code.
However, taking into account (among other things) the UK Code, for
all appointments made on completion of or following the merger,
termination payments are subject to a cap of two years’ remuneration. For Executive Board members other than Mr Joussen and
Mr Baier the cap reduces to one year’s remuneration after the first
year´s service. In any event, if the outstanding term of the service
contract at the time of termination is shorter, then the relevant cap
is reduced to the remaining term.
NOTICE PE RIODS FOR E XECUTIVE DIREC TOR S (D1.5)
Executive Board appointments are normally for a fixed term of three
to five years and therefore do not comply with the UK Code which
stipulates that notice or contract periods should be set at one year
or less. However, the contracts include maximum limits on the
amounts payable on termination (see the Directors´ Remuneration
Report from page 57).
D I A L O G U E W I T H S H A R E H O L D E R S ( E 1 .1)
The Supervisory Board receives feedback from the Chairman and
Deputy Chairman (Shareholder Representative) and Executive
Board Members following meetings with major shareholders.
The following meetings between management and investors (attended by the Chief Executive Officers and / or the Chief Financial Officer
44
TO OUR SHAREHOLDERS
and members of the Investor Relations team where appropriate)
took place during the year ended 30 September 2015:
• The IR team monitors detailed investor feedback (obtained via
the Company brokers) following management roadshows and
results announcements / trading updates.
DIALOGUE WITH SHAREHOLDERS
It is not common practice in German companies for Supervisory Board
members to make themselves available for meetings with major
shareholders. This preserves the separation of duties between the
Supervisory and Executive Boards and prevents unequal dissemination of information. The AGM is considered the appropriate forum
for shareholders to raise any topics for discussion. However, see
page 40 above in relation to the role of Sir Michael Hodgkinson as
Second Deputy Chairman. Accordingly, the Supervisory Board considers that the Company complies with the spirit of the UK Code.
Date
Event
Attendees
October 2014
TUI AG German investor roadshow
FJ , HB
TUI Travel US investor roadshow
PJL
PJL , FJ , HB ,
January 2015
March 2015
May 2015
June 2015
September 2015
Investor roundtable
Commerzbank German investment seminar
German corporates conference
Investor dinner
London investor roadshow
Frankfurt investor roadshow
BAML conference
Paris investor roadshow
Scandinavia investor roadshow
Zurich investor roadshow
US investor roadshow
Deutsche Bank conference
121 with Standard Life
HB
HB
PJL
FJ , PJL , HB
FJ , PJL , HB
FJ , PJL , HB
HB
HB
HB
FJ , PJL , HB
HB
FJ , PJL , HB
Key: Friedrich Joussen ( FJ ), Peter Long ( PJL ), Horst Baier ( HB )
Key topics discussed at meetings between shareholders and Executive
Board members included:
• Updates on the merger of TUI Travel and TUI AG .
• Strategic themes outlined at the Capital Markets Day Update in
May 2015 including the growth roadmap and capital requirements / allocation to achieve growth.
The following additional meetings also took place between Sir Michael
Hodgkinson and the top five former TUI Travel investors to discuss
corporate governance, in particular in the context of the merger,
mainly around alignment of UK and German Corporate Governance
requirements. These meetings were also attended by members of
the Investor Relations Department of TUI AG :
• December 2014 – L&G
• January 2015 – Blackrock, Artemis, JO Hambro, M&G
• June 2015 – Standard Life
Additional communications:
• The Investor Relations report is circulated each month to the
E xecutive Board and a report is also prepared for the Supervisory
Board. This includes updates on share price performances, sell-side
analyst research and investor feedback.
N O N - E X E C U T I V E D I R E C T O R S ’ U N D E R S TA N D I N G O F
S H A R E H O L D E R V I E W S ( E 1 . 2 )
Regular updates on meetings between Executive Board members
and shareholders are circulated to the Supervisory Board to keep
them informed of market and industry views. The updates also
include analysts’ views of TUI AG ’s position in the market.
An Investor Relations Report and Broker Notes are provided electronically to Executive and Supervisory Board Members and, where
relevant, reports are circulated separately to Supervisory Board
Members.
A G M R E S O L U T I O N O N F I N A N C I A L S TAT E M E N T S A N D
C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S ( E 2 .1)
It is not German practice to pass a resolution at the AGM to receive
and approve the financial statements and consolidated financial
statements. Therefore, this was not done at the AGM in 2015 and it
is not intended to do so at the AGM in 2016. However, the first item
on the agenda of the Company’s AGM is the presentation of the
financial statements and consolidated financial statements to the
AGM as required by German law. Under this item, the Executive
Board will explain the financial statements and consolidated financial
statements and the Chairman will explain, in particular, the report of
the Supervisory Board (including this corporate governance statement). Shareholders will have the opportunity to raise any questions
that they wish to put. Questions are typically raised, as is normal in
the AGM s of German companies, and, as a general rule, answers
must be provided under German law.
This is the standard practice for a German company and is in full
compliance with the German Code. While the lack of a resolution to
receive the Annual Report & Accounts is not in compliance with the UK
Code, the Company considers that the arrangements afford shareholders with sufficient opportunity to raise any questions or concerns
that they may have in relation to the Annual Report & A
ccounts, and
to receive answers, in the AGM . Accordingly, the E xecutive Board
and the Supervisory Board consider that the Company complies
with the spirit of the UK Code to the extent practicable.
C I R C U L AT I O N O F A G M D O C U M E N TAT I O N T O S H A R E H O L D E R S
(E . 2.4)
The 2015 AGM of the Company was held on 10 February 2015. As
required by German law, the Invitation to the Company’s 2015 AGM
(including the agenda and the voting proposals of the Executive
Board and the Supervisory Board) was published in the Federal
Gazette in Germany on 30 December 2014. Shareholders then had
rights under German law to requisition additional agenda items at
any time up to 30 days before the AGM . Therefore, in accordance
with German practice, the combined Invitation and explanatory
notes relating to the AGM was sent to shareholders on 19 January 2015 once this deadline had expired, which was less than the
20 business days before the AGM recommended in the UK Code (but
more than the 21 days’ notice required by German law). However, in
addition to the original publication of the Invitation in the Federal
Gazette in Germany, the combined Invitation and explanatory notes
relating to the AGM was published on the company’s website on
30 December 2014. As no agenda items were requisitioned by shareholders, this was in the same form as the final combined Invitation
and explanatory notes relating to the AGM later sent to shareholders. Further, the Company’s Annual Report and Accounts for the
Financial Year to 30 September 2014 was published on 10 December 2014, significantly more than 20 business days before the 2015
AGM . Accordingly, the Company considers that it complied with the
spirit of the UK Code requirements to the extent practicable. A
similar timetable will be followed in relation to the 2016 AGM .”
Functioning of the Executive and Supervisory
Boards
TUI AG is a company under German law. One of the fundamental
principles of German stock corporation law is the dual management
system involving two bodies, the Executive Board in charge of managing the company and the Supervisory Board in charge of monitoring the company. TUI AG ’s Executive Board and Supervisory Board
cooperate closely and in a spirit of trust in managing and overseeing
the Company, with strict separation between the two bodies in terms
of their membership and competences. Both bodies are obliged to
ensure the continued existence of the Company and sustainable
creation of added value in harmony with the principles of the social
market economy.
TUI AG ’s Executive Board comprised six members as at the closing
date 30 September 2015. The Executive Board is responsible for
managing the Company’s business operations in the interests of the
Company. The allocation of functions and responsibilities to individual
Board members is presented in a separate section. On 31 July 2015,
the Supervisory Board appointed Dr Elke Eller a member of the
TO OUR SHAREHOLDERS
45
Executive Board with effect from 15 October 2015. Dr Eller will be in
charge of HR and will also be Labour Director.
For functions, see section on Executive Board and Supervisory Board on page 36
et seqq.
In accordance with the law and the Articles of Association, the Supervisory Board had 20 members at the balance sheet date, i.e. 30 September 2015. From 1 October 2014 until the completion of the
merger between TUI AG and TUI Travel on 12 December 2014, the
Supervisory Board only had 16 members.
For details about the activities of the Supervisory Board, see Supervisory Board
Report from page 23
The Supervisory Board advises and oversees the Executive Board in
the management of the Company. It is involved in strategic and
planning decisions and all decisions of fundamental importance to
the Company. When the Executive Board takes decisions on major
transactions, such as the annual budget, major acquisitions or divestments, it is required by its terms of reference to seek the approval
of the Supervisory Board. The Chairman of the Supervisory Board
coordinates the work in the Supervisory Board, chairs its meetings
and represents the concerns of the body externally. The Supervisory
Board and the Audit Committee have adopted terms of reference for
their own work, which are being revised. In the run-up to the Supervisory Board meetings, the representatives of shareholders and
employees meet separately.
The Executive Board provides the Supervisory Board at regular
meetings and in writing with comprehensive, up-to-date information
about the strategy, the budget, business performance and the situation of the Group, including risk management and compliance. The
Executive Board works on the basis of terms of reference issued by
the Supervisory Board, which are also being revised.
TUI AG has taken out a D&O insurance policy with an appropriate
deductible for all members of the Executive Board and Supervisory
Board. The deductible amounts to 10 % of the loss up to the amount
of one and a half times the fixed annual compensation.
COMPOSITION OF THE SUPERVISORY BOARD
As at the balance sheet date, 30 September 2015, the Supervisory
Board of TUI AG comprised 20 members. Pursuant to section 8 of
the Terms of Reference for the Supervisory Board of TUI AG and in
line with the recommendations of the German Corporate Governance
Code, the composition of the Supervisory Board in financial year
46
TO OUR SHAREHOLDERS
2014 / 15 ensured that its members as a group had the knowledge,
ability and expert experience required to properly complete their
tasks. The goals set by the Supervisory Board itself for its composition
include in particular comprehensive industry knowledge, internationality, diversity and an appropriate degree of female representation. The goals set by the Supervisory Board itself for its composition
include in particular comprehensive industry knowledge, internationality, diversity and an appropriate participation of women. These
goals are currently being reviewed and further developed, where
necessary, in the framework of a revision of its terms of reference.
The revision will be completed in the first half-year of the financial
year 2015 / 16.
For current composition, go to:
www.tuigroup.com/en-en/investors/corporate-governance/management
Twelve members of the Supervisory Board had considerable international experience. Due to the different professional careers of its
members, the composition of the Supervisory Board overall reflects
a great diversity of relevant experience, ability and industry knowhow.
None of the shareholder representatives on the Supervisory Board
had any commercial or personal relationship with the Company, its
Executive Board or third parties that might cause a material clash of
interests. Eight shareholder representatives are independent.
In accordance with the recommendations of the German Corporate
Governance Code, the original shareholder representatives were
individually elected for five-year terms of office during elections to
the Supervisory Board at the Annual General Meeting in 2011. All
shareholder representatives newly elected in the period under review
were individually elected at the Extraordinary General Meeting on
28 October 2014 or the Annual General Meeting on 10 February 2015. The district court of Hanover appointed Wilfried H. Rau,
Dr Dierk Hirschel and Marcell Witt as employee representatives. The
only member older than 68 years when elected to the Supervisory
Board was Sir Michael Hodgkinson. In this case, the Supervisory
Board deemed it appropriate to deviate from the regular age limit in
order for the Company to benefit from Sir Michael Hodgkinson’s
extensive experience in the framework of the imminent integration
process and in order to ensure continuity. In financial year 2014 / 15,
no former Executive Board members of TUI AG were represented
on the Supervisory Board. On 23 September 2015, the Supervisory
Board also specified a regular limit of length of membership for the
members of the Supervisory Board, in accordance with section 5.4.1.
para. 2 sentence 2 of the German Corporate Governance Code.
COMMIT TEE S OF THE SUPERVISORY BOARD AND THEIR
C O M P O S I T I O N
At 30 September 2015, the balance sheet date, the Supervisory
Board had established four committees from among its members to
support its work: the Presiding Committee, the Audit Committee,
the Nomination Committee and the Integration Committee. The
Galaxy Committee, which functioned from September 2014 until the
completion of the merger, was absorbed into the newly created
Integration Committee in December 2014. A committee was furthermore established in accordance with section 27 (3) of the German
Co-Determination Act.
The Presiding Committee and Audit Committee have up to eight
members each, with an equal number of shareholder and employee
representatives. The Presiding Committee prepares, in particular,
the appointment of Executive Board members, including the terms
and conditions of service contracts and remuneration proposals. The
Audit Committee’s task is to support the Supervisory Board in exercising its oversight function. The Chairman of the Audit Committee is
an independent financial expert and has particular knowledge and
experience in the application of accounting principles and internal
control methods from his own professional practice. The Nomination
Committee consists exclusively of shareholder representatives, in
keeping with the recommendation in the German Corporate Governance Code. Its task is to suggest suitable candidates for the Supervisory Board to propose to the Annual General Meeting.
The Integration Committee was set up by a resolution adopted by the
Supervisory Board on 10 July 2014 for a period of two years after
completion of the planned merger. Its role is to advise and monitor
the Executive Board in implementing the integration process required
following completion of the merger. It develops recommendations for
resolutions to be adopted by the Supervisory Board; however, it does
not have a mandate to adopt any resolutions on its behalf.
Executive and Supervisory Board members have a duty to act in
TUI AG ’s best interests. In the completed financial year 2014 / 15,
there were no conflicts of interest requiring disclosure to the Supervisory Board. In the Executive Board of TUI AG only Mr Long sat on
more than three supervisory boards of listed non-Group companies or
supervisory bodies of external companies with similar requirements.
Specifications pursuant to sections 76 (4), 111 (5)
of the German Stock Corporation Act
At least 30 % of the Supervisory Board members were women and
at least 30 % were men at the balance sheet date. The Supervisory
Board was therefore compliant with section 96 (2) sentence 1 of the
German Stock Corporation Act. Neither the shareholder representatives nor the employee representatives on the Supervisory Board
have raised an objection to general application of the 30 % quorum
to the entire Supervisory Board in accordance with section 96 (2)
sentence 2 of the German Stock Corporation Act. The Supervisory
Board resolved during the period under review, in keeping with
section 111 (5) of the German Stock Corporation Act, that a woman
should be recruited to the Executive Board. This objective is to be
implemented by 31 October 2015. It was achieved ahead of the
target date as at 15 October 2015 when Dr Eller joined the Executive
Board.
In turn, the Executive Board resolved during the period under review,
in keeping with section 76 (4) of the German Stock Corporation Act,
that women should account for 20 % of executives at the level immediately below the Executive Board and 30 % at the level below this.
Both targets are to be achieved by 30 June 2017.
Additional corporate governance disclosures
TO OUR SHAREHOLDERS
47
auditors. The Executive Board regularly informs the Supervisory
Board about existing risks and changes to these risks. The Audit
Committee deals in particular with monitoring the accounting process,
including reporting, the effectiveness of the internal control and risk
management systems and the internal auditing system, compliance
and audit of the annual financial statements.
More detailed information about risk management in the TUI Group
is presented in the Risk Report. It also contains the report on the
accounting-related internal control and risk management system
required in accordance with the German Commercial Code (sections
289 (5), 315 (2) no. 5 HGB ).
SHAREHOLDERS AND ANNUAL GENER AL MEE TING
TUI AG shareholders exercise their co-determination and monitoring
rights at the Annual General Meeting, which takes place at least
once a year. The AGM takes decisions on all statutory matters, and
these are binding on all shareholders and the Company. For voting
on resolutions, each share confers one vote.
All shareholders registering in due time are entitled to participate in
the Annual General Meeting. Shareholders who are not able to attend
the AGM in person are entitled to have their voting rights exercised
by a bank, a shareholder association, one of the representatives provided by TUI AG and acting on the shareholders’ behalf in accordance
with their instructions, or some other proxy of their own choosing.
Shareholders also have the opportunity of authorising the representative provided by TUI AG via the web in the run-up to the AGM .
Shareholders can, moreover, register for electronic dispatch of the
AGM documents.
Risk Report see page 97
T R A N S PA R E N C Y
TUI provides immediate, regular and up-to-date information about
the Group’s economic situation and new developments to capital
market participants and the interested public. The Annual Report
and the Interim Reports are published within the applicable timeframes. The Company publishes press releases and ad hoc announcements, if required, on topical events and any new developments.
Moreover, the company website at www.tuigroup.com provides comprehensive information on the TUI Group and the TUI share.
The scheduled dates for the principal regular events and publications
– such as the AGM , Annual Report and Interim Reports – are set out
in a financial calendar. The calendar is published well in advance and
made permanently accessible to the public on TUI AG ’s website.
Information on the AGM at: www.tuigroup.com/en-en/investors/agm
Financial calendar online at: www.tuigroup.com/en-en/investors
The invitation to the AGM and the reports and information required
for voting are published in accordance with the provisions of the
German Stock Corporation Act and provided in German and English
on TUI AG ’s website. During the AGM , the presentations by the
chairmen of the Supervisory Board and the Executive Board can be
followed live over the internet.
DIREC TORS’ DE ALINGS /SHAREHOLDINGS
RISK MANAGEMENT
Good corporate governance entails the responsible handling of
commercial risks. The Executive Board of TUI AG and the management of the TUI Group have comprehensive general and company-
specific reporting and monitoring systems available to identify, assess
and manage these risks. These systems are continually developed,
adjusted to match changes in overall conditions and reviewed by the
The Company was informed by William Waggott of notifiable purchase and sale transactions of TUI AG shares or related financial
instruments by directors (directors’ dealings) concerning financial
year 2014 / 15.
Such purchase and sale transactions by directors are governed
by the TUI Share Dealing Code, adopted for the TUI Group by the
Executive Board on 16 December 2014.
Directors’ dealings online at:
www.tuigroup.com/en-en/investors/corporate-governance/directors-dealings
48
TO OUR SHAREHOLDERS
No member of the Executive Board or Supervisory Board holds
shares in TUI AG , related options or other derivatives representing
1 % or more of the capital stock. Moreover, the ownership of TUI AG
shares and related financial instruments by Executive and Super
visory Board members amounts in total to less than 1 % of the
shares issued by the Company.
ACCOUNTING AND AUDITING
TUI AG prepares its consolidated financial statements and consolidated interim financial statements in accordance with the provisions
of the International Financial Reporting Standards (IFRS ) as applicable in the European Union. The statutory annual financial statements of TUI AG , which form the basis for the dividend payment,
are prepared in accordance with the German Commercial Code
(HGB ). The consolidated financial statements are prepared by the
Executive Board, audited by the auditors and approved by the Supervisory Board. The interim reports are discussed between the Audit
Committee and the Executive Board prior to publication. The consolidated financial statements and the financial statements of
TUI AG were audited by PricewaterhouseCoopers Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft, Hanover, the auditors elected by
the 2015 Annual General Meeting. The audit was based on German
auditing rules, taking account of the generally accepted auditing
standards issued by the German Auditors’ Institute as well as the
International Standards on Auditing. It also covered risk management
and compliance with reporting requirements on corporate governance
pursuant to section 161 of the German Stock Corporation Act as
well as the Listing Rule 9.8.7 R and Listing Rule 9.8.10.
See audit opinion by the auditors on page 304
The condensed consolidated interim financial statements and management reports as at 31 December 2014, 31 March and 30 June 2015
were examined by the auditors.
In addition, a contractual agreement was concluded with the auditors
to the effect that the auditors will immediately inform the Super
visory Board of any grounds for disqualification or partiality as well as
of all findings and events of importance arising during the perfor-
mance of the audit. There were no grounds to provide such information in the framework of the audit of financial year 2014 / 15.
Compliance
The TUI Group’s Compliance Management System is a fundamental
element of our commitment to commercial, environmental and socially responsible activity and operations. It is underlined by memberships in associations such as the UN Global Compact and the Business
Integrity Forum of Transparency International and therefore forms
an indispensable part of the TUI Group’s corporate culture and our
corporate governance activities.
CODE OF CONDUC T / SUPPLIERS’ CODE OF CONDUC T
The Code of Conduct, drawn up for the entire TUI Group, enshrines
guiding principles for everyone to follow, from executives and senior
management to every Group employee. It defines minimum standards
aimed at assisting our employees in their everyday work and providing
orientation in conflict situations.
Compliance online: www.tuigroup.com/en-en/about-us/compliance
The Suppliers’ Code of Conduct forms the counterpart to TUI ’s
Code of Conduct. It details our ethical, social and legal expectations
of our business partners. After we had announced our Suppliers’
Code of Conduct, our business partners were required by contract
to observe, in particular, all national and international anti-corruption
laws applicable to the supplier relationship. This places our business
relationship with our partners on a solid legal and social basis.
COMPLIANCE RULES
In addition, the principles set out in the Code of Conduct are detailed
in various policies and rules reflecting the legal requirements. Guidance on appropriate conduct and working practice is found in, for
example, our anti-corruption policy and our policies on gifts and
invitations, data protection and trade sanctions. All groups of employees have thus been acquainted with the policies of relevance to
their everyday work.
TO OUR SHAREHOLDERS
49
COMPLIANCE MANAGEMENT SYSTEM
TUI ’s Compliance Management System is built on three pillars: prevention, discovery and response, which, in turn, comprise a large
number of internal measures and processes:
COMPLIANCE MANAGEMENT PROCESSES
PREVENTION
•
•
•
•
•
Compliance Policies and Group Policies
Compliance Training
Compliance Communication
Compliance Information
Compliance Risk Identification and
Risk Assessment
EXPOSURE
REACTION
• Reporting
• Leads
• Investigations
Activities in the completed financial year focused on merging and
harmonising two proven Compliance Management Systems tailored
to the needs of the tourism sector. In a first step, the Compliance
Management Systems of TUI Travel and TUI AG were compared to
identify what they had in common. It became clear that the systems
were partly based on different approaches but that both Compliance
Management Systems have similar structures. Based on this result,
the best from both systems has now been gradually merged into the
new Compliance Management System.
The strategic goal of TUI ’s Compliance Management System is to
prevent misconduct. Apart from a bundle of Compliance-specific
measures, responsible action requires managers and employees to
receive appropriate assistance. To this end, the Group-wide Policy
Management process was transferred to Group Compliance following
the merger of TUI AG and TUI Travel PLC in order to create a harmonised set of Policies that are sufficiently comprehensive and clear
to meet our standards.
COMPLIANCE PROGR AMME
In the period under review, the Compliance Programme focused on
various issues, including anti-corruption measures, protecting free and
fair competition, data protection and the handling of trade sanctions.
Any other issues identified are regularly monitored to check their
relevance for the TUI Group through a risk identification process. From
next financial year, they will be captured via an automated system.
COMPLIANCE STRUC TURE
The TUI Group’s Compliance structure supports those responsible
in the task of communicating the values and rules and anchoring them
in the Group. It ensures that Compliance requirements are imple-
• Implementation of Process Controls
• Exchange with Management and
local Compliance Officers
• Disciplinary Measures
mented throughout the Group in different countries and cultures.
Under the aegis of the Chief Compliance Officer, Group Compliance
and the decentralised Compliance Officers perform the following
tasks at different management levels:
Compliance online: www.tuigroup.com/en-en/about-us/compliance
1. Raising awareness of Compliance
2.Achieving the goals of the Code of Conduct and the Compliance
Rules
3. Providing training
4. Advising managers and employees
5. Securing the necessary exchange of information
6. Monitoring national and international legislative initiatives
7. Providing regular reports
COMPLIANCE TR AINING
Compliance training is an indispensable element of TUI ’s Compliance
Management System, with its focus on preventing misconduct. It is
carried out according to a graded concept. Managers and staff at TUI
have all benefited from face-to-face teaching, online programmes
and the “Compliance Compass” brochure, enabling all our employees
to acquaint themselves with Compliance and the underlying corporate
values, regardless of their position in the company hierarchy and
their geographical location. In order to reflect the importance of
training for a compliance culture within the Company, the online
training programme was extended in the completed financial year so
as to include a refresher course on TUI ’s Code of Conduct. In addition,
TUI companies and sectors offer training schemes with their own
specific focus to raise awareness of challenges they may face.
50
TO OUR SHAREHOLDERS
WHISTLE-BLOWING
In agreement with various stakeholder groups, TUI offers its managers
and employees a group-wide whistleblower system to enable severe
infringements of the corporate values anchored in TUI ’s Code of
Conduct to be reported anonymously and without reprisals. This
whistle-blower system is currently available to staff in 47 countries.
Any infringements reported are consistently investigated in the interests of all stakeholders and the Company. Our top priority is to ensure
confidentiality and handle information discreetly. Any incidents
reported are analysed by Group Compliance in consultation with
Group Audit Services and the necessary action is then taken. Infringements are fully investigated in the interests of all our staff and the
Company itself.
Executive Board of TUI AG : www.tuigroup.com/en-en/about-us/management
Remuneration Report
Introduction
Remuneration of the Executive Board
The remuneration report outlines the general principles underlying
the determination of the total remuneration of the members of the
Executive Board of TUI AG , and sets out the structure and level of
the remuneration of the Executive Board members. It also comprises the general principles governing, and levels of the remuneration
paid to members of the Supervisory Board. This section is in particular based on the recommendations of the German Corporate
Governance Code (“GCGC ”), the requirements of the German Commercial Code (Handelsgesetzbuch) and the German Stock Corporation Act (Aktiengesetz) and, to the extent practicable, the requirements of the UK Corporate Governance Code (“ UK -Code”).
I . A P P R O V A L O F T H E R E M U N E R AT I O N F R A M E W O R K B Y
SHAREHOLDERS
As TUI AG is also listed on the London Stock Exchange, this report
refers, wherever appropriate, to the recommendations of the UK Code. However, matters that are related to the governance or legislation of a German company, and therefore are mandatory law, are
disclosed in this report by reference to German governance or legislation.
Whilst the UK -Code requirements are followed as far as practicable,
in line with current German legislation it is not proposed that the
remuneration framework and policy will be put to shareholders for
a binding vote. In addition, there are no Malus or Clawback terms
within the framework at the current time. This position will continue
to be monitored.
Following a recommendation from the Presiding Committee (for
further remits, please see page 27), and according to section 87 (1)
sentence 1 German Stock Corporation Act (Aktiengesetz), the Supervisory Board determines the remuneration of the individual
E xecutive Board members. It also regularly adopts and reviews the
remuneration framework for the Executive Board.
For Executive Board members of TUI AG , a new remuneration
framework was proposed in financial year 2009 / 10 and approved by
the shareholders at the Annual General Meeting on 17 February 2010. The framework is designed to promote and reward sustained growth and robust financial performance in the Group
through incentivising the members of the Executive Board.
II.
REGULAR INTERNAL AND EXTERNAL REVIEW
For the financial year 2014 / 15 a review against section 87 (1) of the
German Stock Corporation Act (Aktiengesetz) was performed as an
annual standing agenda item of the Presiding Committee and the
Supervisory Board during their meetings on 21 October 2015 with
the outcome that the Executive Board remuneration was deemed to
meet the requirements of section 87 (1) of the German Stock Corporation Act (Aktiengesetz).
To support its decision making, the Presiding Committee and the
Supervisory Board may from time to time seek external advice regarding remuneration. In particular, advice provides external perspective of the appropriateness and levels of remuneration within
the company (vertical benchmarking) and also provides horizontal
benchmarking data for comparable companies in the DA X and
MDA X on the levels of pay and short and long-term incentives. In
financial year 2014 / 15, the Supervisory Board commissioned a
consultancy company, hkp Group AG , to prepare an expert report
regarding the appropriateness of the remuneration level for Executive Board members. The overall finding supported the judgement
of the Supervisory Board that the level of remuneration for Executive Board members complied with section 87 (1) of the German
Stock Corporation Act (Aktiengesetz) as well as the recommendations of the GCGC .
III.
M E R G E R R E L AT E D I S S U E S
On 12 December 2014, the merger between TUI AG and the former
TUI Travel PLC (“ TUI Travel”; now TUI Travel Limited) became effective (the “merger date”). Up until the merger date, the Executive
Board of TUI AG consisted of Mr Joussen, Mr Baier and Mr Long. As
part of the merger, the Executive Board of TUI AG was expanded
and Mr Ebel, Mr Lundgren and Mr Waggott were also appointed as
members.
Mr Long, Mr Lundgren and Mr Waggott were Executive Directors of
the former TUI Travel PLC before the merger became effective. Up
until the merger date, Mr Long, Mr Lundgren and Mr Waggott received their remuneration exclusively from TUI Travel. Their remuneration was approved by TUI Travel’s remuneration committee
which consisted of independent Non-Executive Directors. Following
the merger, the service contracts of Mr Long, Mr Lundgren and
Mr Waggott with TUI Travel were terminated and new service contracts were agreed by TUI AG with Mr Joussen, Mr Long, Mr Baier,
Mr Ebel, Mr Lundgren and Mr Waggott. The remuneration framework agreed by the shareholders in 2010 applies to of all these service contracts. The remuneration framework also applies to service
contracts concluded or amended after the merger date, including
the service contracts of Mr Burling and Mrs Eller.
I V.
GENER AL PRINCIPLES
The framework and levels for the remuneration of Executive Board
members are determined and reviewed regularly by the full Supervisory Board taking into account the following principles:
• The remuneration framework should be transparent and easy to
understand.
• The remuneration must be appropriate. The level of remuneration
is determined by the responsibilities and personal performance
of each individual Executive Board member.
• The economic position, performance and sustainable development
of the company are taken into account. A substantial part of the
total remuneration is based on the achievement of stretching
long-term performance targets.
• Remuneration is reviewed in line with the relevant peer group and
benchmark of other large international organisations and also
reflects typical practice in other large German companies.
• The common level of remuneration is considered in comparison
with the compensation structure in other areas of the company.
In this regard it is also taken due account of the relationship
between the remuneration of the Executive Board and that of
senior management and staff, both overall and with regard to its
development over time.
• The remuneration is set at a level that is competitive in the market
for highly qualified Executive Board members.
TO OUR SHAREHOLDERS
51
• There is an appropriate correlation between the levels of fixed
remuneration and performance-based variable remuneration.
• The interests of the Executive Board members should be consistent with those of the shareholders in that the Executive Board
members are incentivised to benefit from both share price increases for the company and other shareholder measures such as
Total Shareholder Return.
V. R E M U N E R AT I O N O F T H E E X E C U T I V E B O A R D I N F I N A N C I A L
Y E A R 2 0 14 / 15
In the financial year 2014 / 15, the remuneration framework for the
Executive Board of TUI AG comprises: (1) a fixed remuneration; (2)
an annual performance-based remuneration; (3) virtual shares of
TUI AG in accordance with the Long-Term Incentive Plan (“ LTIP ”);
(4) fringe benefits; (5) pension benefits; and (6) a potential additional remuneration in cash or in virtual shares (“discretionary bonus”).
Details of the various remuneration elements are set out below:
1.
F I X E D R E M U N E R AT I O N
P U R P O S E A N D L I N K T O S T R AT E G Y
Highly-qualified Executive Board members who are needed to develop
and implement company strategy should be acquired and retained.
The remuneration should be commensurate with the abilities, experience and role of the individual Executive Board member.
O P E R AT I O N
The Supervisory Board must take into account the following criteria,
in particular, when determining the fixed remuneration:
• Individual degree of responsibility.
• Results of operational and personal performance (if applicable).
• Economic position, performance and sustainable development of
the company.
• Remuneration structure in companies that are comparable to
TUI AG in terms of size, worldwide business activities and complexity.
• Ability to be competitive to attract and retain highly-qualified and
marketable Executive Board members.
• The comparison to the broader remuneration structures of the
senior leaders and the wider employees in the TUI Group.
The fixed remuneration is paid in twelve equal instalments at the
end of each month. If the service contract begins or ends in the
course of a year, the fixed annual remuneration will be paid pro-rata
for that year.
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TO OUR SHAREHOLDERS
The remuneration is generally reviewed when service contracts of
Executive Board members are extended, and fixed for the term of
the new service contract. A review of the remuneration can also take
place during the term of a service contract in particular if there is a
change with respect to the tasks or responsibility of an Executive
Board member.
In the event of a Reported Group EBITA of between 50 % below
target value and target value, any award will be based on a linear
interpolation between 0 % and 100 % and in the event of a Reported
Group EBITA of between target value and 50 % above target value
linear interpolation between 100 % and 187.5 % will be used to
determine the degree of target achievement. The degree of target
achievement will be rounded to two decimal places, as customary in
commercial practice.
PERFORMANCE CRITERIA
Personal performance and the operational performance are taken
into account when determining the fixed remuneration.
2 . A N N U A L P E R F O R M A N C E - B A S E D R E M U N E R AT I O N
( J A H R E S E R F O L G S V E R G Ü T U N G – “J E V ” )
The JE V is intended to motivate Executive Board members to
achieve ambitious and stretching financial and strategic performance targets. The performance targets are reflective of the
company strategy and aimed at increasing corporate value.
At the discretion of the Supervisory Board, the degree of target
achievement for the performance target can be multiplied by a factor
of between 0.8 and 1.2, depending on the individual performance of
the Executive Board member and based upon their achievement of
personal objectives and other performance indicators such as
customer satisfaction and / or employee satisfaction metrics.
The figure resulting from the multiplication of the Target Amount by
the degree of target achievement for the Reported Group EBITA
and the discretionary multiplier will be paid out in cash in the month
following the approval by the Supervisory Board of the annual
accounts of TUI AG for the respective financial year. If the service
contract begins or ends in the course of the financial year relevant
for the grant of the JE V, the claims for payment of the same will
generally be pro-rata.
O P E R AT I O N
CAP
The JE V will be calculated on the basis of a group performance
indicator and the individual performance of the Executive Board
member. The performance reference period is the financial year of
TUI AG .
For every Executive Board member, an individual target amount
(“Target Amount”) is agreed in the service contract. Since 1 October 2010 the performance target has been the reported earnings
before interest, tax and amortisation of goodwill (“Reported Group
EBITA ”). The target value for the one-year performance reference
period for the Reported Group EBITA performance target will be set
each year by the Supervisory Board.
To measure performance, the planned Reported Group EBITA will
be compared with the corresponding actual Reported Group EBITA
as set forth in the audited consolidated accounts of TUI AG . The
degree of target achievement will be determined as follows:
• If the value achieved is below the target value by 50 % or more,
this is equivalent to a target achievement of 0 %.
• If the value achieved corresponds to the target value, this is
equivalent to a target achievement of 100 %.
• If the value achieved is above the target value by 50 % or more,
this is equivalent to a target achievement of 187.5 %.
An annual cap applies and the maximum amount payable for the
JE V is capped as follows:
•
•
•
•
•
•
•
Mr Joussen: € 2,070.0 thousand
Mr Long: € 2,070.0 thousand
Mr Baier: € 1,012.5 thousand
Mr Burling: € 900.0 thousand
Mr Ebel: € 720.0 thousand
Mr Waggott: € 810.0 thousand
Mr Lundgren: € 1,192.5 thousand
In accordance with section 87 (1) sentence 3 German Stock Corporation Act (Aktiengesetz), the Supervisory Board is entitled to limit
the amount of the JE V to allow for extraordinary circumstances
(e. g. takeover of the company, sale of parts of the company, uncovering of hidden reserves, external influences). Mr Lundgren received
the JE V on a pro-rata basis until 31 May 2015.
The JE V is linked to the degree of target achievement and the individual performance of the Executive Board member. The degree of
target achievement and the personal performance determines the
amount of the possible JE V up to the cap.
3 . V I R T U A L S H A R E S A C C O R D I N G T O T H E LT I P
3 .1 G E N E R A L P R I N C I P L E S
The long-term objective is to increase corporate and shareholder
value by defining ambitious goals that are closely linked to the company’s earnings, share price performance and dividends.
TO OUR SHAREHOLDERS
53
• TSR value of TUI AG equivalent to the third to bottom value of
the Dow Jones Stoxx 600 Travel & Leisure corresponds to a target
achievement of 25 %.
• TSR value of TUI AG equivalent to the median of the Dow Jones
Stoxx 600 Travel & Leisure corresponds to a target achievement
of 100 %.
• TSR value of TUI AG equivalent to the third to top value of the
Dow Jones Stoxx 600 Travel & Leisure corresponds to a target
achievement of 175 %.
O P E R AT I O N
The LTIP is a performance share plan based on virtual shares and
is assessed over a period of four years (“Performance Reference
Period”).
For Executive Board members, an individual target amount (“Target
Amount”) is agreed in the service contract. At the beginning of each
financial year a provisional number of virtual shares, commensurate
with the Target Amount, will be set. This will constitute the basis for
the determination of the final performance-based payment for the
tranche in question at the end of the respective Performance Reference Period. To set this number, the Target Amount will be divided
by the average XE TR A price of TUI AG shares over the 20 prior
trading days. The claim to a payment only arises upon expiry of the
Performance Reference Period and depends on whether or not the
respective performance target is achieved.
The performance target for determining the amount of the final
payout at the end of the Performance Reference Period is the total
shareholder return (“ TSR ”) of TUI AG relative to TSR of the Dow
Jones Stoxx 600 Travel & Leisure, whereby the ranking of the
TUI AG TSR in relation to the Dow Jones Stoxx 600 Travel & Leisure
companies will be monitored over the entire Performance Reference
Period. The TSR is the aggregate of all share price increases plus the
gross dividends paid over the Performance Reference Period. Data
from a reputable data provider (e. g. Bloomberg, Thomson Reuters)
will be used for the purpose of establishing the TSR values for
TUI AG and the Dow Jones Stoxx 600 Travel & Leisure companies.
The reference for the determination of the rankings is the composition of the Dow Jones Stoxx 600 Travel & Leisure on the last day of
the Performance Reference Period. The values for companies that
were not listed over the entire Performance Reference Period will be
factored in on a pro-rata basis. The level of target achievement is
established as follows depending on the ranking of the TSR of
TUI AG relative to the TSR values of the Dow Jones Stoxx 600
Travel & Leisure companies:
• TSR value of TUI AG equivalent to the bottom and second to
bottom value of the Dow Jones Stoxx 600 Travel & Leisure corres
ponds to a target achievement of 0 % .
For performance between the third to bottom and top third position
a straight line assessment will be used to determine the level of
target achievement at between 25 % and 175 %. The degree of target
achievement will be rounded to two decimal places, as customary in
commercial practice.
To determine the final number of virtual shares, the degree of target
achievement will be multiplied by the provisional number of virtual
shares on the final day of the Performance Reference Period (“Final
Number of Virtual Shares”). The payout is determined by multiplying
the Final Number of Virtual Shares by the average XE TR A price of
TUI AG shares over the 20 trading days prior to the end of the Performance Reference Period. The payout which is calculated in this
way will be due in the month following the approval of the annual
accounts of TUI AG for the fourth financial year of the Performance
Reference Period and the resulting amount is paid out in cash. If the
service contract ends in the course of the financial year relevant for
the grant of the LTIP, the claims for payment of the same will
generally be pro-rata.
CAP
LTIP payments are capped and the absolute maximum amount
payable in cash per Performance Reference Period is capped at:
•
•
•
•
•
•
Mr Joussen: € 4,440.0 thousand
Mr Long: € 4,440.0 thousand
Mr Baier: € 2,025.0 thousand
Mr Burling: € 1,500.0 thousand
Mr Ebel: € 1,500.0 thousand
Mr Waggott: € 1,650.0 thousand and from financial year 2015 / 16
onwards € 2,100.0 thousand
• Mr Lundgren: € 2,370.0 thousand
The LTIP is based on the financial results over a four-year period.
The relevant degree of target achievement is determined by comparing the change in TSR at TUI AG with the change in TSR at the
companies in the Dow Jones Stoxx 600 Travel & Leisure Index.
54
TO OUR SHAREHOLDERS
3 . 2 D E V E L O P M E N T O F A G G R E G AT E V I R T U A L S H A R E S O F
E X E C U T I V E B O A R D M E M B E R S O F T U I A G
( I N C L . F O U R -Y E A R S - M O D E L )
O P E R AT I O N
Executive Board members receive the following fringe benefits:
Units
Balance as at 30 Sep 2014
Virtual shares granted for the financial year 2014 / 15
Decrease of virtual shares
679,101
453,532
– 60,213
1,072,420
On 30 September 2015, former Executive Board members who were
Executive Board members of TUI AG prior to the merger date held
no virtual shares in TUI AG (previous year no virtual shares).
Provisions totalling € 5,417.9 thousand (previous year € 2,660.8
thousand) and liabilities worth € 1,530.0 thousand (previous year
€ 1,839.2 thousand) were made to cover entitlements under
TUI AG ’s LTIP for Executive Board members. Those provisions only
cover liabilities of the LTIP of TUI AG and do not include rolled-over
liabilities of TUI Travel. The total expense for share-based payments
and the amount attributable to each individual Executive Board
member are shown in the table “Remuneration of individual Executive Board members”.
Provisions that sat with TUI Travel for rolled-over virtual share LTI s
to their Executive Directors who are now Executive Board members
of TUI AG at an amount of € 2,030 thousand were transferred to
TUI AG and increase the provision mentioned in the paragraph
above. Other rolled-over equity settled LTI s continue to be provided
for in equity within the Group accounts.
4.
FRINGE BENEFITS
Additional benefits offered should be competitive to those offered
to highly qualified Executive Board members.
Fringe benefits should also support and promote the health and
well-being of the Executive Board members.
Fringe benefits include the provision of a company car with driver
services as well as travel and insurance benefits.
• Reimbursement of business travel expenses in accordance with
TUI AG ’s general business travel guidelines.
• Twice a year, free of charge, a holiday from within the World of
TUI range, without any limitation as to tour operator, type of holi
day, category or price. Spouses / partners are granted a 50 % discount on the catalogue price for the aforementioned vacations,
and children still in education or training a 100 % discount. Apart
from that, a reduction of 75 % (spouses / partners) / 50 % (children
still in education or training) is granted for flights.
• A suitable company car with driver or alternatively a car allowance
of € 1.5 thousand gross per month.
Insurance cover is provided in line with local arrangements applicable
in Germany and the United Kingdom. This is offered as follows:
TUI AG provides insurance cover for accidents and death in service
to the customary extent for Mr Joussen, Mr Baier and Mr Ebel and
will pay the insurance contributions for the terms of their service
contract. The coverage amounts to € 1,500.0 thousand for death
and € 3,000.0 thousand for disablement. Furthermore, Mr Joussen,
Mr Baier and Mr Ebel receive an allowance towards health and longterm care insurance in the amount payable if the respective Executive
Board member were an employee, but no more than half of each
insurance premium.
For Mr Long, Mr Burling and Mr Waggott private medical insurance
cover is provided for both the individual and their spouse / partner
and school age children. In addition life insurance cover is provided
as a multiple of their base salary and permanent health insurance
cover is also provided. These benefits are provided and paid for by
TUI AG as part of the existing employee policies offered to UK employees. Mr Lundgren received the fringe benefits on a pro-rata basis
until 31 May 2015.
AMOUNT
It can be assumed that the value of the benefits for a company car
and for free holiday annually received by an individual Executive
Board member normally does not exceed € 100.0 thousand.
The provision of fringe benefits is not based on the performance of
the company and / or personal performance.
5.
PENSION BENEFITS
Highly-qualified Executive Board members to develop and implement
company strategy should be attracted and retained.
The pension entitlements should be competitive on the market for
highly-qualified Executive Board members and should provide them
with security in their retirement.
O P E R AT I O N
Pensions are paid to former Executive Board members if they reach
the predefined age limit or are permanently incapacitated. The Execu
tive Board members are not entitled to receive transition payments
upon leaving the Executive Board, with the exception of Mr Ebel who
has an acquired right receiving transition payments under a legacy
contract.
With regard to pension entitlements, different principles apply for
Mr Joussen, Mr Baier and Mr Ebel on the one hand and Mr Long,
Mr Burling, Mr Lundgren and Mr Waggott on the other hand due to
the legacy systems in Germany and the UK .
Mr Joussen, Mr Baier and Mr Ebel are entitled to pension benefits
according to the pension commitments granted to Executive Board
members by TUI AG (“ TUI AG Pension Scheme”). Those Executive
Board members receive, on an annual basis, a contractually agreed
amount that is paid into an existing pension plan for the respective
Executive Board member. The contributions to the company pension
plan carry an interest rate established in the pension obligation. The
interest rate currently stands at 5 % p. a. The beneficiary may choose
between a one-off payment, payment by instalments or pension
payments.
The amounts agreed on and effective since the merger date in the
service contracts are:
• Mr Joussen: € 454.5 thousand per year. Mr Joussen becomes eli
gible for payment of the pension upon reaching the age of 62.
According to the service contract effective up until the merger date,
Mr Joussen received an amount of € 196.5 thousand per year.
TO OUR SHAREHOLDERS
55
• Mr Baier: € 267.75 thousand per year. Mr Baier becomes eligible
for payment of the pension upon reaching the age of 60. According to the service contract effective up until the merger date, the
pension contribution amounted to 22.5 % of the target cash remuneration in the contribution year.
• Mr Ebel: € 207.0 thousand per year. Mr Ebel becomes eligible for
payment of the pension upon reaching the age of 62.
Should Executive Board members retire from TUI AG before the
normal retirement date due to an on-going occupational disability,
they will receive an occupational disability pension until they are
able to work again, but at most until they reach the normal retirement date.
Under certain circumstances, spouses, partners or cohabitants of
deceased Executive Board members will receive a survivor’s pension
worth 60 % of the above-mentioned pension for their lifetime or
until remarriage. Children of Executive Board members will receive
an orphan’s pension, paid as a maximum until they reach the age of
27. Orphans who have lost one parent will receive 20 % of the pension,
and orphans who have lost both parents will receive 25 %.
Mr Long, Mr Burling and Mr Waggott receive a fixed annual amount
for pension purposes. These may be payable into an agreed company
pension scheme where possible or where the tax arrangements prevent payment into a pension plan will be payable as cash. The
amounts agreed on in the service contracts are:
•
•
•
•
Mr Long: € 454.5 thousand
Mr Lundgren: € 316,125 thousand
Mr Waggott also has a deferred pension entitlement under the Final
Salary section of the TUI UK Scheme. He ceased to be an active
member on 3 September 2007 (appointment of Mr Waggott as
E xecutive Director of TUI Travel) and, therefore did not accrue further
benefits during the year. David Burling has a deferred pension entitle
ment under the Final Salary section of the TUI UK Scheme. He
ceased to be an active member on 31 March 2014 and therefore did
not accrue further benefits during the year. Mr Lundgren received
the amount for pension purposes on a pro-rata basis until
31 May 2015.
Pension entitlements are not based on the performance of the company and / or personal performance.
56
TO OUR SHAREHOLDERS
PENSION OF CURRENT EXECUTIVE BOARD MEMBERS BELOW THE TUI AG PENSION SCHEME
Addition to / reversal from
pension provision
2014 / 15
2013 / 14
€ ’000
Friedrich Joussen
Horst Baier
Sebastian Ebel
Total
At 30 September 2015, pension obligations for active members of the
Executive Board totalled € 10,714.7 thousand (previous year balance
sheet date: € 6,860.2 thousand) according to IAS 19 and € 9,233.1
thousand (previous year balance sheet date € 6,371.9 thousand) according to commercial law (Handelsgesetzbuch). In the period under
review, the provision according to IAS 19 was increased by an
amount of € 3,854.5 thousand (previous year decrease by € 13,627.4
thousand), with an increase of € 2,861.2 thousand (previous year
decrease by € 11,692.3 thousand) according to commercial law
(Handelsgesetzbuch) provisions.
1,876.7
1,193.1
784.7
3,854.5
0.0
715.2
0.0
715.2
30 Sep 15
Net present value
30 Sep 14
1,876.7
8,053.3
784.7
10,714.7
0.0
6,860.2
0.0
6,860.2
O P E R AT I O N
The Supervisory Board may grant an additional remuneration in
cash or in virtual shares in exceptional circumstances such as an
extraordinary high workload in connection with the merger of
TUI AG and TUI Travel or a realization of synergies that exceed the
planned level by more than 20 % above budget. The Supervisory
Board determines whether and to what amount the additional
remuneration will be paid.
CAP
Where the above table shows a corresponding amount, the pension
obligations for beneficiaries are funded via the conclusion of pledged
reinsurance policies. As the reinsurance policy fully covers the pension
obligations for former and current Executive Board members, the
insurance was deducted as an asset from the pension obligations.
The values of the pension-entitlements differ with regard to the
prior year figures as they are disclosed unbalanced to the covered
assets in the amount of the actuarial net present value. The figures
of the prior year have been adapted accordingly.
6 . P O T E N T I A L A D D I T I O N A L R E M U N E R AT I O N I N C A S H O R I N
VIRTUAL SHARE S (DISCRE TIONARY BONUS)
The potential additional remuneration is intended to compensate
exceptional performance by Executive Board members.
An annual cap applies and the cash equivalent of the additional
remuneration is capped at:
•
•
•
•
•
•
•
Mr Joussen: € 920.0 thousand
Mr Long: € 920.0 thousand
Mr Baier: € 450.0 thousand
Mr Ebel: € 320.0 thousand
Mr Lundgren: € 530.0 thousand
Personal performance and the result of operations are taken into
account when determining the additional remuneration.
7.
TO OUR SHAREHOLDERS
57
R E M U N E R AT I O N C A P S
The following table summarises the agreed caps that will apply with
respect to remuneration (remuneration components and total
remuneration) Executive Board members for a financial year.
R E M U N E R AT I O N C A P S
€ ’000 1
Friedrich Joussen
Peter Long
Horst Baier
David Burling
Sebastian Ebel
William Waggott 4
Johann Lundgren
1
2
3
4
Fixed remuneration2
JE V
LTIP
Discretionary bonus
Annual cap on
remuneration3
1,100.0
1,100.0
740.0
600.0
680.0
690.0
875.0
2,070.0
2,070.0
1,012.5
900.0
720.0
810.0
1,192.5
4,440.0
4,440.0
2,025.0
1,500.0
1,500.0
1,650.0
2,370.0
920.0
920.0
450.0
400.0
320.0
360.0
530.0
7,500.0
7,500.0
4,200.0
3,450.0
3,380.0
3,600.0
5,000.0
Discclosure on full-year base accordig to current service contracts
No cap applied
Cap of total remuneration acc. to service contract
From financial year 2015 / 16 on LTIP will be capped at € 2,100.0 thousand, annual cap on remuneration will be at € 4,080.0 thousand
VI.
ROLLE D - OVE R SHARE AWARDS
During their period of service as Executive Directors of TUI Travel,
Mr Long, Mr Lundgren, and Mr Waggott received long-term incentives (LTI ) on an annual basis in the form of TUI Travel shares with
a vesting period of three years. Mr Burling received these long-term
incentives during the term of his employment relationship with TUI
Travel.
As a result of the three-year vesting period, a number of tranches are
still outstanding. Following the merger in December 2014 and the subsequent delisting of TUI Travel, it was agreed that these outstanding
share awards would be rolled over. These outstanding share awards
will remain in place and will vest in line with the previous three-year
period. At the date of vesting any share awards that vest will be
awarded as the applicable number of TUI AG . The performance conditions applicable to these awards will remain in place as follows:
Awards vest based on performance against Earnings per share (as
defined in the plan rules), relative TSR and Return on invalid Capital
measures over a three-year period. The relative weightings are
shown are EPS – 50 %, Relative TSR – 25 % and ROIC – 25 %.
Following the merger it has been agreed by the Supervisory Board
that the performance will be measured up until the merger date
based upon TUI Travel performance and from the merger date on
based upon TUI AG performance. Aggregate performance will then
be determined for the full three-year period. Deferred bonus awards
are not subject to performance measures. No further performance
measures apply to deferred share awards as these represent the
deferral of annual bonus amounts that have already been earned.
Mr Long, Mr Burling, Mr Lundgren and Mr Waggott were granted
share-based awards under the Deferred Annual Bonus Scheme
(“ DABS ”) as well as the Performance Share Plan (“ PSP ”). The following tranches are currently outstanding:
58
TO OUR SHAREHOLDERS
FORME R E XECUTIVE DIREC TOR S OF TUI TR AVE L PLC
O U T S TA N D I N G D A B S / D A B L I S S H A R E AWA R D S AT 3 0 S E P T E M B E R 2 0 15 ( AWA R D E D B Y T U I T R AV E L P L C )
T U I A G C L O S I N G S H A R E P R I C E AT 3 0 S E P 2 0 15 ( G B P ) : 12 .18
Name
TUI Travel
TUI Travel n
il-cost
shares / nil-cost
options awarded
options held at d uring the year ended
1 October 2014
30 September 2015
Peter Long
256,646 1
1,026,584 2
181,546 1
726,184 2, 3
Total
2,190,960
David Burling
42,253 1
169,012 2
40,295 1
161,180 2, 3
Total
412,740
William Waggott
134,207 1
536,828 2
98,063 1
392,252 2, 3
Total
Johan Lundgren
1,161,350
161,972 1, 4
161,972
25,000 1, 4
25,000
42,777 1, 4
42,777
170,809 1
683,236 2
119,607
478,428 2, 3
Total
1,452,080
Grand total
5,217,130
54,444 1, 4
54,444
284,193
Award date
6 Dec 12
6 Dec 12
12 Dec 13
12 Dec 13
8 Dec 14
Market price
TUI Travel s hares
( TUI Travel) per
vested and r eleased
share at award during the year ended
30 September 2015
(GBP )
2.840
2.840
3.769
3.769
4.500
0
6 Dec 12
6 Dec 12
12 Dec 13
12 Dec 13
8 Dec 14
2.840
2.840
3.769
3.769
4.500
0
6 Dec 12
6 Dec 12
12 Dec 13
12 Dec 13
8 Dec 14
2.840
2.840
3.769
3.769
4.500
0
6 Dec 12
6 Dec 12
12 Dec 13
12 Dec 13
8 Dec 14
2.840
2.840
3.769
3.769
4.500
0
0
All outstanding share awards shown were made over TUI Travel PLC shares. At vest / exercise, shares will convert to TUI AG shares at the merger conversion ratio of 0,399.
1
D ABS / DABLIS deferred award: The deferred element of annual bonus, subject to forfeiture for gross misconduct, bankruptcy or certain other circumstances in accordance with the
scheme rules.
2
D ABS / DABLIS matching award: A multiple of the deferred award, subject to continued employment to the release date and performance conditions over the three-year vesting period.
3 Change to remuneration structure with effect from 1 October 2014 – last matching awards made in December 2013.
4 All awards made in December 2014 are phantom awards and will therefore be settled in cash on vesting.
Market price
( TUI Travel)
per share at
vesting (GBP )
59
Maximum TUI Travel
shares / nil-cost
options held at
30 September 2015
Maximum TUI AG
shares / nil-cost
options held at
30 September 2015
Maximum value based
on TUI AG share
price of GBP 12.18 at
30 September 2015
(GBP )
0
256,646
1,026,584
181,546
726,184
161,972
2,352,932
102,401
409,607
72,436
289,747
64,626
938,817
1,247,244
4,989,013
882,270
3,529,118
787,145
11,434,790
0
42,253
169,012
40,295
161,180
25,000
437,740
16,858
67,435
16,077
64,310
9,975
174,655
205,330
821,358
195,818
783,296
121,496
2,127,298
0
134,207
536,828
98,063
392,252
42,777
1,204,127
53,548
214,194
39,127
156,508
17,068
480,445
652,215
2,608,883
476,567
1,906,267
207,888
5,851,820
0
0
170,809
683,236
119,607
478,428
54,444
1,506,524
68,152
272,611
47,723
190,892
21,723
601,101
830,091
3,320,402
581,266
2,325,065
264,586
7,321,410
0
0
5,501,323
2,195,018
26,735,318
Market value
at vesting (GBP )
TUI Travel
s hares / nil-cost
Planned / Actual options lapsed during
the year ended
vesting and
30 September 2015
release date
TO OUR SHAREHOLDERS
6 Dec 15
6 Dec 15
12 Dec 16
12 Dec 16
8 Dec 17
0
6 Dec 15
6 Dec 15
12 Dec 16
12 Dec 16
8 Dec 17
0
6 Dec 15
6 Dec 15
12 Dec 16
12 Dec 16
8 Dec 17
0
6 Dec 15
6 Dec 15
12 Dec 16
12 Dec 16
8 Dec 17
60
TO OUR SHAREHOLDERS
FORME R E XECUTIVE DIREC TOR S OF TUI TR AVE L PLC
O U T S TA N D I N G P S P AWA R D S AT 3 0 S E P T E M B E R 2 0 15 ( AWA R D E D B Y T U I T R AV E L P L C )
T U I A G C L O S I N G S H A R E P R I C E AT 3 0 S E P 2 0 15 ( G B P ) : 12 .18
TUI Travel PSP
Name
Peter Long
Total
s hares / nil-cost
options held at
1 October 2014
598,591
338,286
936,877
David Burling
105,633
79,596
Total
185,229
William Waggott
232,394
145,927
378,321
Total
Johan Lundgren
Total
Grand total
TUI Travel PSP
n il-cost options
awarded during the
year ended
30 September 2015
TUI Travel PSP
Award date
6 Dec 12
12 Dec 13
Market price
( TUI Travel) per
share at award
(GBP )
shares vested
and r eleased during
the year ended
30 September 2015
2.840
3.769
0
137,600
137,600
0
6 Dec 12
12 Dec 13
8 Dec 14
2.840
3.769
4.500
0
6 Dec 12
12 Dec 13
2.840
3.769
0
0
295,774
185,725
481,499
6 Dec 12
12 Dec 13
2.840
3.769
0
0
1,981,926
137,600
0
PSP awards are subject to continued employment to the release date and performance conditions over the three-year vesting period.
All outstanding share awards shown were made over TUI Travel PLC shares. At vest / exercise, shares will convert to TUI AG shares at the merger conversion ratio of 0,399.
1 The award made to David Burling in December 2014 is a phantom award and will therefore be settled in cash on vesting.
TO OUR SHAREHOLDERS
Maximum
Market price
( TUI Travel)
per share at
vesting (GBP )
61
s hares / nil-cost
options held at
30 September 2015
Maximum TUI AG
shares / nil-cost
options held at
30 September 2015
Maximum value based
on TUI AG share
price of GBP 12.18 at
30 September 2015
(GBP )
0
598,591
338,286
936,877
238,837
134,976
373,813
2,909,035
1,644,008
4,553,043
0
105,633
79,596
137,600
322,829
42,147
31,758
54,902
128,807
513,350
386,812
668,706
1,568,868
0
232,394
145,927
378,321
92,725
58,224
150,949
1,129,391
709,168
1,838,559
0
0
295,774
185,725
481,499
118,013
74,104
192,117
1,437,398
902,587
2,339,985
0
0
2,119,526
845,686
10,300,455
Market value
at vesting (GBP )
Planned / Actual
vesting and
release date
TUI Travel PSP
TUI Travel PSP
shares lapsed during
the year ended
30 September 2015
6 Dec 15
12 Dec 16
0
6 Dec 15
12 Dec 16
8 Dec 17
0
6 Dec 15
12 Dec 16
0
6 Dec 15
12 Dec 16
62
TO OUR SHAREHOLDERS
V I I . PAY M E N T S / B E N E F I T S I N C A S E O F P R E M AT U R E
T E R M I N AT I O N O F E X E C U T I V E B O A R D M E M B E R S H I P
1.
GENER AL CONTR AC TUAL FR AME WORK
Payments made to an Executive Board member on premature termination of his service contract without good cause generally may
not exceed the value of two years’ compensation (severance pay cap)
and compensate no more than the remaining term of the service
contract. The severance pay cap is calculated on the basis of the
target direct compensation (fixed remuneration, target JE V and
target LTIP ) for the last expired financial year and, if relevant, the
expected target direct compensation for the current financial year. If
the service contract is terminated for cause without notice, no payments will be made to Executive Board members.
In cases of premature termination of the service contract, the JE V
and payments according to the LTIP will be managed as follows:
• JE V :
• If the company terminates the service contract for cause without
notice before the end of the one-year Performance Reference
Period on the grounds of matters for which the Executive
Board member is responsible or if the Executive Board member
terminates the service contract without cause, the claim to the
JE V for the performance reference period in question will be
forfeited and no alternative remuneration or compensation for
the loss of the JE V will be paid.
• In all other cases of premature termination of the service contract before the end of the one-year Performance Reference
Period, the JE V will generally be paid pro-rata.
• LTIP :
• If the company terminates the service contract for cause without notice before the end of the respective Performance Reference Period on the grounds of matters for which the Executive
Board member is responsible, or if the Executive Board member terminates the service contract without good cause, the
claims under the LTIP will lapse for all tranches not yet paid
and no alternative remuneration or compensation will be paid.
• If the service contract ends before the expiry of the Performance Reference Period for other reasons, the claims under the
LTIP will be maintained for tranches not yet paid. The tranche
of the current financial year will generally be reduced on a
pro-rata basis. The determination of pay-out will be done in the
same way as in case of a continuation of the service contract.
The service contracts of the Executive Board members do not contain
change of control clauses.
The service contract of Mr Joussen contains an exceptional termination right. According to this provision Mr Joussen is entitled to resign
from his position as a member of the Executive Board and to terminate his service contract with a notice period of six months to the end
of a month if he should not be appointed as sole Chairman of the
Executive Board of TUI AG on the day following the Annual General
Meeting 2016. The exceptional right of termination can only be exercised six months after the Annual General Meeting 2016 within a period of three months. The exceptional right of termination lapses if
Mr Joussen is appointed as sole Chairman of the Executive Board of
TUI AG before exercising the exceptional right of termination. If
Mr Joussen exercises the exceptional right of termination, he is entitled to a severance payment in the amount of the severance pay cap
as described above. Claims of Mr Joussen to the JEV for the Performance Reference Period in question and claims under the LTIP for all
tranches of virtual shares not yet paid will not lapse in this case.
2 . PAY M E N T S / B E N E F I T S M A D E I N C A S E O F P R E M AT U R E
T E R M I N AT I O N O F E X E C U T I V E B O A R D M E M B E R S H I P I N
F I N A N C I A L Y E A R 2 0 14 / 15
Mr Lundgren resigned from his position as member of the Executive
Board of TUI AG with effect from 31 May 2015. In this respect,
TUI AG and Mr Lundgren agreed that their service relationship
would end by mutual agreement with effect from 31 May 2015.
Mr Lundgren has received his fixed remuneration, the fringe benefits, the car allowance and the amount for pension purposes on a
pro-rata basis from 12 December 2014 until the termination date.
Mr Lundgren also has received the JE V on a pro-rata basis from
1 October 2014 until the termination date pursuant to the terms
agreed on in his service contract. In addition, Mr Lundgren has received secretarial support until the expiry of 30 September 2015.
The JE V was settled at the termination date, taking into account the
Reported Group EBITA according to the forecast submitted at the
Supervisory Board meeting on 12 May 2015, and an individual performance factor of 1.0. The annual, performance based remuneration
became due on 1 July 2015.
Mr Lundgren is not entitled to any rights under TUI AG ’s LTIP.
Granted virtual shares, if any, have been forfeited entirely. All share
awards granted to Mr Lundgren by TUI Travel prior to the financial
year 2014 / 15 and which were rolled over to TUI AG will be treated
according to the agreed plan conditions.
A post-contractual covenant not to compete for the period from
1 June 2015 to 30 September 2016 has been agreed in the severance agreement. For the duration of the post-contractual covenant
not to compete, TUI AG pays Mr Lundgren a compensation totalling
€ 2,318.8 thousand. Correlatively over the period of 16 months instalments of € 144,927.06 are payable at the end of each month.
Payments made to Mr Lundgren in financial year 2014 / 15 as a result
of the termination of his service contract amount to a total of
€ 1,108.9 thousand (monthly compensation for post-contractual
covenant, JE V pro-rated, pension contribution pro-rated).
3 . PAY M E N T S T O PA S T E X E C U T I V E B O A R D M E M B E R S W H O
L E F T P R I O R T O F I N A N C I A L Y E A R 2 0 14 / 15
Other than the above mentioned no payments were made in financial
year 2014 / 15 to past Executive Board members due to premature
termination of Executive board membership (previous year € 2,451.0
thousand). As far as those past Executive Board members received
pension payments during the financial year 2014 / 15 they are included
in the paragraph VIII of this remuneration report.
V I I I . P E N S I O N PAY M E N T S M A D E T O PA S T E X E C U T I V E B O A R D
MEMBERS
In financial year 2014 / 15, the total pensions paid to former Executive
Board members and their surviving dependants totalled € 4,891.1
thousand (previous year € 4,455.8 thousand).
Pension provisions for former members of the Executive Board and
their dependants amounted to € 79,754.3 thousand (previous year
€ 69,626.6 thousand) as measured according to IAS 19 at the balance
63
TO OUR SHAREHOLDERS
sheet date, and € 68,170.10 thousand (previous year € 63,193.0
thousand) as measured according to commercial law provisions
(Handelsgesetzbuch). In financial year 2014 / 15, obligations for this
group of persons decreased by € 610.1 thousand (in financial year
2013 / 14 increase by € 20,038.9 thousand) according to IAS 19 and
increased by € 3,088.6 thousand (in the previous year by € 11,559.3
thousand) according to commercial law provisions.
I X . O V E R V I E W : R E M U N E R AT I O N O F I N D I V I D U A L E X E C U T I V E
BOARD MEMBERS
1 . R E M U N E R AT I O N O F I N D I V I D U A L E X E C U T I V E
BOARD M
EMBER S GR ANTED BY TUI AG FOR
F I N A N C I A L Y E A R 2 0 14 / 15
R E M U N E R AT I O N O F I N D I V I D U A L E X E C U T I V E B O A R D M E M B E R S G R A N T E D B Y T U I A G F O R F I N A N C I A L Y E A R 2 0 14 /15
(ACC . TO S E C T I O N 314 , PA R AG R A PH 6 L I T A O F T H E G E R M A N CO M M E RC I A L CO D E
€ ’000
Friedrich Joussen
Peter Long 3
Horst Baier 4
David Burling 5
Sebastian Ebel 6
William Waggott6
Johann Lundgren7
Total
Previous year 8
1
2
3
4
5
6
7
8
Fixed remuneration1
JE V
Discretionary Bonus
LTIP 2
Total
2014 / 15
Total
2013 / 14
1,132.0
918.4
811.9
215.3
561.2
583.5
420.4
4,642.7
1,747.3
1,335.8
1,335.8
977.2
193.6
373.7
479.2
384.3
5,079.6
1,722.2
500.0
500.0
320.0
0.0
320.0
0.0
0.0
1,640.0
0.0
8,900.1
2,980.1
3,384.2
1,668.9
1,907.6
2,207.5
3,170.7
24,219.0
2,371.3
11,867.9
5,734.3
5,492.7
2,077.8
3,162.6
3,270.1
3,975.4
35,581.4
5,595.4
3,895.9
1,699.5
5,595.4
Including fringe benefits (without insurances under Group coverage)
Disclosure of all performance reference periods within current service contract terms ( IFR S 2)
Since merger date paid by TUI AG
Acc. to current service contract fixed remuneration in F Y 2014 / 15 includes € 63,600 received for memberships on the Hapag-Lloyd AG Supervisory Board and its committees
Since 1 June 2015
Since merger date
From merger date until 31 May 2015
Remuneration Horst Baier received for memberships on the Hapag-Lloyd AG Supervisory Board and its committees is deducted
Between 1 October 2014 and the merger date Mr Long has been
member of the Executive Board of TUI AG but received his remuneration through TUI Travel based on a resolution of its Remuneration Committee. The remuneration shown below for information
purposes only relates to the terms of Mr Long´s TUI Travel service
agreement and includes the bonus payable in December 2014 for
the financial year 2013 / 14 and the long term incentives schemes
awarded by TUI Travel in December 2011 which vested in December
2014. During this period TUI Travel performed very strongly with
market capitalisation more than doubling and with significant improvement in the share price and the value of the long term incentive
awards which vested reflect this.
The fixed remuneration of Mr Long for the financial year 2014 / 15 as
determined by the Remuneration Committee of TUI Travel amounted
to € 272.0 thousand for the period between 1 October 2014 and
merger date. Furthermore during the reporting period and based on
the resolutions of the Remuneration Committee of TUI Travel,
Mr Long received a remuneration referring to prior financial years
totalling € 19,508.2 thousand whereof € 13,673.8 thousand were
attributable to bonuses and € 5,834.4 thousand to the long-term
incentive programme.
As in the prior year, the members of the Executive Board did not
receive any loans or advances in financial year 2014 / 15.
The two tables below (Remuneration awarded and Remuneration
paid) show the benefits already granted by TUI AG and payments
received by the individual members of the Executive Board.
64
TO OUR SHAREHOLDERS
2 . R E M U N E R AT I O N A W A R D E D ( A C C . T O 4 . 2 . 5 , AT TA C H M E N T TA B L E 1 D C G K )
R E M U N E R AT I O N AWA R D E D ( A C C . T O 4 . 2 . 5 , AT TA C H M E N T TA B L E 1 D C G K )
2013 / 14
€ ’000
Fixed remuneration
Fringe benefits
Total
JE V
Discretionary bonus
LTIP
Cash Deferral (2013 / 14 – 2014 / 15)
LTIP (2013 / 14 – 2016 / 17)
LTIP (2014 / 15 – 2017 / 18)
Total
Pension / service costs3
Total remuneration4
1,000.0
56.5
1,056.5
920.0
–
1,731.4
–
1,731.4
–
3,707.9
196.5
3,904.4
Friedrich Joussen
Joint CEO , since 14 February 20131
2014 / 15
2014 / 15
2014 / 15
(Min)
(Max)
1,080.4
51.6
1,132.0
920.0
500.0
1,805.6
–
–
1,805.6
4,357.6
648.9
5,006.5
1,080.4
51.6
1,132.0
0.0
0.0
0.0
–
–
0.0
1,132.0
648.9
1,780.9
1,080.4
51.6
1,132.0
2,070.0
920.0
4,440.0
–
–
4,440.0
6,851.1
648.9
7,500.0
2013 / 14
–
–
–
–
–
–
–
–
–
–
–
–
Peter Long
Joint CEO , since 12 December 2014 2
2014 / 15
2014 / 15
2014 / 15
(Min)
(Max)
884.8
33.7
918.4
920.0
500.0
1,805.6
–
–
1,805.6
4,144.0
365.6
4,509.6
884.8
33.7
918.4
0.0
0.0
0.0
–
–
0.0
918.4
365.6
1,284.0
884.8
33.7
918.4
2,070.0
920.0
4,440.0
–
–
4,440.0
7,134.4
365.6
7,500.0
Horst Baier
CFO , since 8 November 2007
2013 / 14
2014 / 15
2014 / 15
(Min)
2014 / 15
(Max)
680.0
10.8
690.8
255.0
–
894.9
255.0
639.9
–
1,840.7
358.3
2,199.0
728.3
20.1
748.3
450.0
320.0
823.5
–
–
823.5
2,341.8
401.2
2,743.1
728.3
20.1
748.3
0.0
0.0
0.0
–
–
0.0
748.3
401.2
1,149.6
728.3
20.1
748.3
1,012.5
450.0
2,025.0
–
–
2,025.0
3,798.8
401.2
4,200.0
€ ’000
Fixed remuneration
Fringe benefits
Total
JE V
Discretionary bonus
LTIP
Cash Deferral (2013 / 14 – 2014 / 15)
LTIP (2013 / 14 – 2016 / 17)
LTIP (2014 / 15 – 2017 / 18)
Total
Total remuneration4
David Burling
Member of Executive Board, since 1 June 2015
2013 / 14
2014 / 15
2014 / 15
2014 / 15
(Min)
(Max)
–
–
–
–
–
–
–
–
–
–
–
–
200.0
15.3
215.3
133.3
–
203.3
–
–
203.3
552.0
75.0
627.0
200.0
15.3
215.3
0.0
0.0
0.0
–
–
0.0
215.3
75.0
290.3
200.0
15.3
215.3
300.0
400.0
500.0
–
–
500.0
1,415.3
75.0
1,490.3
TO OUR SHAREHOLDERS
65
€ ’000
Fixed remuneration
Fringe benefits
Total
JE V
Discretionary bonus
LTIP
Cash Deferral (2013 / 14 – 2014 / 15)
LTIP (2013 / 14 – 2016 / 17)
LTIP (2014 / 15 – 2017 / 18)
Total
Total remuneration4
Sebastian Ebel
Member of Executive Board, since 12 December 2015
2013 / 14
2014 / 15
2014 / 15
2014 / 15
(Min)
(Max)
–
–
–
–
–
–
–
–
–
–
–
–
547.0
14.3
561.2
257.4
320.0
490.7
–
–
490.7
1,629.3
279.2
1,908.5
547.0
14.3
561.2
0.0
0.0
0.0
–
–
0.0
561.2
279.2
840.5
547.0
14.3
561.2
579.1
320.0
1,206.5
–
–
1,206.5
2,666.9
279.2
2,946.1
William Waggott
Member of Executive Board, since 12 December 2014
2013 / 14
2014 / 15
2014 / 15
2014 / 15
(Min)
(Max)
–
–
–
–
–
–
–
–
–
–
–
–
555.0
28.5
583.5
360.0
–
671.0
–
–
671.0
1,614.5
190.0
1,804.5
555.0
28.5
583.5
0.0
0.0
0.0
–
–
0.0
583.5
190.0
773.5
555.0
28.5
583.5
810.0
360.0
1,650.0
–
–
1,650.0
3,403.5
190.0
3,593.5
2013 / 14
€ ’000
Fixed remuneration
Fringe benefits
Total
JE V
Discretionary bonus
LTIP
Cash Deferral (2013 / 14 – 2014 / 15)
LTIP (2013 / 14 – 2016 / 17)
LTIP (2014 / 15 – 2017 / 18)
Total
Total remuneration4
1
2
3
4
–
–
–
–
–
–
–
–
–
–
–
–
Johan Lundgren
Member of Executive Board,
from 12 December 2014 to 31 May 2015
2014 / 15
2014 / 15
2014 / 15
(Min)
(Max)
412.1
8.3
420.4
353.3
–
0.0
–
–
–
773.7
144.9
918.6
Appointment as CEO of TUI AG , member of Executive Board since 15 October 2013
Appointment as Joint CEO of TUI AG (before: CEO of TUI Travel PLC ), member of the Executive Board of TUI AG since 3 September 2007
For Mr Joussen, Mr Baier and Mr Ebel service costs acc. to IA S19 are disclosed, Mr Long, Mr Burling and Mr Waggott received pension contributions
For Mr Joussen, Mr Long and Mr Baier the (reduced) cap on total remuneration acc. to their service contracts applies
412.1
8.3
420.4
0.0
0.0
0.0
–
–
–
420.4
144.9
565.3
412.1
8.3
420.4
795.0
530.0
0.0
–
–
–
1,745.4
144.9
1,890.3
66
TO OUR SHAREHOLDERS
3 . R E M U N E R AT I O N PA I D ( A C C . T O 4 . 2 . 5 , AT TA C H M E N T TA B L E 2 D C G K )
R E M U N E R A T I O N P A I D ( A C C . T O 4 . 2 . 5 , A T T A C H M E N T T A B L E 2 D C G K )
€ ’000
Fixed remuneration
Fringe benefits
Total
JE V
Discretionary bonus
LTIP
Cash Deferral (in F Y 2011 / 12)
LTIP (2010 / 11 – 2013 / 14)
LTIP (2011 / 12 – 2014 / 15)
LTIP (2013 / 14 – 2016 / 17)
Others
Total
Total remuneration
Friedrich Joussen
Joint CEO ,
since 14 February 20131
2014 / 15
2013 / 14
1,080.4
51.6
1,132.0
1,326.3
500.0
0.0
–
–
–
–
–
–
–
2,958.3
648.9
3,607.2
1,000.0
56.5
1,056.5
1,108.0
–
1,280.0
–
–
–
–
–
1,280.0
–
3,444.5
196.5
3,641.0
Peter Long
Joint CEO ,
since 12 December 2014 2
2014 / 15
2013 / 14
884.8
33.7
918.4
1,326.3
500.0
0.0
–
–
–
–
–
–
–
2,744.8
365.6
3,110.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Horst Baier
CFO ,
since 8 November 2007 2
2014 / 15
2013 / 14
728.3
20.1
748.3
648.7
320.0
1,853.6
–
152.4
171.2
–
1,530.0
–
63.6
3,634.2
401.2
4,035.5
680.0
10.8
690.8
307.1
–
866.3
169.9
137.1
–
559.2
–
–
– 245.4
1,618.8
358.3
1,977.1
€ ’000
Fixed remuneration
Fringe benefits
Total
JE V
Discretionary bonus
LTIP
LTIP (2010 / 11 – 2013 / 14)
LTIP (2011 / 12 – 2014 / 15)
LTIP (2013 / 14 – 2016 / 17)
Others
Total
Total remuneration
David Burling
Member of Executive Board
since 1 June 2015
2014 / 15
2013 / 14
200.0
15.3
215.3
192.2
–
0.0
–
–
–
–
–
–
–
407.5
75.0
482.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Sebastian Ebel
since 12 December 2014
2014 / 15
2013 / 14
547.0
14.3
561.2
371.1
320.0
0.0
–
–
–
–
–
–
–
1,252.3
279.2
1,531.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
William Waggott
since 12 December 2014
2014 / 15
2013 / 14
555.0
28.5
583.5
475.7
–
0.0
–
–
–
–
–
–
–
1,059.2
190.0
1,249.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
TO OUR SHAREHOLDERS
67
€ ’000
Johan Lundgren
Member of Executive Board from
12 December 2014 to 31 May 2015
2014 / 15
2013 / 14
Fixed remuneration
Fringe benefits
Total
412.1
8.3
420.4
384.3
–
0.0
–
–
–
–
–
–
–
804.6
144.9
949.5
JE V
Discretionary bonus
LTIP
LTIP (2010 / 11 – 2013 / 14)
LTIP (2011 / 12 – 2014 / 15)
LTIP (2013 / 14 – 2016 / 17)
Others
Total
Total remuneration
1
2
3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Appointment as CEO of TUI AG , member of Executive Board since 15 October 2013
Appointment as Joint CEO of TUI AG (before: CEO of TUI Travel PLC ), member of the Executive Board of TUI AG since 03 September 2007
For Mr Joussen, Mr Baier and Mr Ebel service costs acc. to IA S19 are disclosed, Mr Long, Mr Burling and Mr Waggott received pension contributions
The allocation for the completed financial year shows the cash payment for the performance period “ LTIP 2011 / 12 – 2014 / 15” for
Mr Baier. For Mr Joussen a contractual advance payment of € 1,280.0
thousand was agreed with for the performance period “ LTIP
2013 / 14 – 2016 / 17” payable upon the adoption of the annual financial statements for financial year 2013 / 14. It is shown as an allocation and will be offset against the actual entitlement that will have
arisen at the end of the performance period “ LTIP 2013 / 14 –
2016 / 17”. Under the new service contract of December 2014, TUI AG
and Mr Joussen agreed to cease any entitlement of Mr Joussen to
contractual advance payments as part of the LTIP. As a consequence, Mr Joussen will not receive additional advance payments of
€ 100.0 thousand each for the performance periods “ LTIP
2012 / 13 – 2015 / 16” and “ LTIP 2013 / 14 – 2016 / 17” nor has he received any advance payments for the performance period “ LTIP
2014 / 15 – 2017 / 18” nor will he receive advance payments for subsequent performance periods.
68
X.
1.
TO OUR SHAREHOLDERS
THE RECRUITMENT OF NE W E XECUTIVE BOARD MEMBERS
GENER AL PRINCIPLES
When hiring a new Executive Board member, or promoting to the
Executive Board from within the Group, the Supervisory Board will
offer a package that is sufficient to retain and motivate and, if relevant,
attract the right talent whilst at all times aiming to pay no more than
necessary. In determining an appropriate remuneration package, the
Supervisory Board will take into consideration all relevant factors,
including, but not limited to, the impact on other existing remuneration arrangements, the candidate’s location and experience, external
market influences and internal pay relativities.
Typically, the new appointment will be in line with, or be transitioned
on to, the principles as set in the previous tables. In certain circumstances, the Supervisory Board may use other elements if it considers
it appropriate to do so with due regard to the best interests of all
stakeholders of the company.
2 . I L L U S T R AT I O N S O F T H E A P P L I C AT I O N O F T H E E X E C U T I V E
B O A R D M E M B E R S R E M U N E R AT I O N P O L I C Y
of stretching short and long-term performance targets. As part of
this process, the Supervisory Board will regularly review the impact of
different performance scenarios on the potential reward opportunity
and pay-outs to be received by Executive Board members. The charts
show hypothetical values of the remuneration package for Executive
Board members under three assumed performance scenarios:
• Minimum performance (i.e. fixed elements of pay only, with no
JE V pay-out or vesting of long-term incentives);
• Performance in line with expectations (assuming target pay-out
under the JE V, and threshold performance under the LTIP ); and
• Maximum performance (assuming maximum pay-out under both
the JE V and the LTIP in line with the caps allowable in the individual service contracts).
These charts are for illustrative purposes only and actual outcomes
may differ from those shown.
Key:
Fixed Remuneration
The company’s remuneration arrangements have been designed so
that a substantial proportion of pay is dependent on the achievement
JE V
LTIP
FRIEDRICH JOUSSEN
7,500
8,000
€ ’000
Fixed
Remuneration
JE V
LTIP
Total
1,573
0
0
1,573
1,573
1,573
920
2,070
1,480
3,858
3,973
7,500
100
0
0
100
40
21
23
28
37
51
100
100
7,000
1.Minimum performance
2.Performance in line
with expectations
3.Maximum performance
6,000
5,000
3,973
4,000
%
3,000
2,000
1,000
€
1,573
’000
1.
2.
3.
with expectations
TO OUR SHAREHOLDERS
69
PETER LONG
7,500
8,000
€ ’000
Fixed
Remuneration
JE V
LTIP
Total
1,573
0
0
1,573
1,573
1,573
920
2,070
1,480
3,858
3,973
7,500
100
0
0
100
40
21
23
28
37
51
100
100
Fixed
Remuneration
JE V
LTIP
Total
1,026
0
0
1,026
1,026
1,026
450
1,013
675
2,025
2,151
4,063
100
0
0
100
48
25
21
25
31
50
100
100
Fixed
Remuneration
JE V
LTIP
Total
825
0
0
825
825
825
400
900
500
1,500
1,725
3,225
100
0
0
100
48
26
23
28
29
47
100
100
7,000
with expectations
6,000
5,000
3,973
4,000
%
3,000
2,000
1,000
€
1,573
’000
1.
2.
3.
with expectations
HORST BAIER
8,000
€ ’000
7,000
6,000
5,000
4,063
4,000
2,151
3,000
2,000
1,000
€
%
1,026
’000
1.
2.
with expectations
3.
with expectations
DAVID BURLING
8,000
€ ’000
7,000
6,000
5,000
3,225
4,000
3,000
2,000
1,000
%
1,725
€
825
’000
1.
2.
with expectations
3.
with expectations
70
TO OUR SHAREHOLDERS
SEBASTIAN EBEL
8,000
€ ’000
Fixed
Remuneration
JE V
LTIP
Total
905
0
0
905
905
905
320
720
500
1,500
1,725
3,125
100
0
0
100
52
29
19
23
29
48
100
100
Fixed
Remuneration
JE V
LTIP
Total
974
0
0
974
974
974
360
810
700
2,100
2,034
3,884
100
0
0
100
48
25
18
21
34
54
100
100
7,000
6,000
5,000
4,000
3,125
3,000
2,000
1,000
%
1,725
€
905
’000
1.
2.
with expectations
3.
with expectations
WILLIAM WAGGOT T
8,000
€ ’000
7,000
6,000
5,000
3,884
4,000
3,000
2,000
1,000
%
2,034
€
974
’000
1.
2.
with expectations
3.
with expectations
Notes
These illustrations of the application of the Director’s Remuneration Policy show the potential reward opportunity for the Executive Directors from 1 October 2015 onwards.
Total remuneration for minimum performance (“fixed remuneration”) is comprised of salary, company car or car allowance and employer pension contribution / allowance.
Total remuneration for performance in line with expectations is comprised of “fixed remuneration”, target annual bonus and target long-term incentive.
Total remuneration for maximum performance is comprised of “fixed remuneration”, maximum annual bonus and maximum long-term incentive including share price appreciation.
Maximum is capped at overall remuneration caps where applicable.
All employee share plans have been excluded, as have any legacy awards which Executive Directors may hold.
Remuneration of the Supervisory Board
The remuneration of Supervisory Board members currently comprises
fixed components and a long-term variable component. For parts of
a financial year, when a member leaves or joins the Supervisory
Board, the remuneration is paid on a pro-rata basis. It is determined
in accordance with section 18 of TUI AG ’s Articles of Association,
which have been made permanently accessible to the public on the
internet.
Highly-qualified Supervisory Board members should be acquired
and retained.
O P E R AT I O N
The members of the Supervisory Board receive a fixed remuneration
of € 50.0 thousand, payable upon completion of the financial year,
besides reimbursement of their expenses. The Chairman of the
Supervisory Board receives three times, the deputy chairs receive
one and a half times the fixed and long-term variable remuneration
of an ordinary member.
An additional fixed remuneration of € 40.0 thousand is paid for
membership of committees (the Presiding Committee, Audit Committee and Integration Committee, with the exception of the Nomination Committee). The Chairman of the Audit Committee receives
three times the remuneration of the ordinary Audit Committee
members.
The fixed remuneration is paid out at the end of the respective
financial year.
The members of the Supervisory Board do not receive annual
management bonuses or fringe benefits.
First time for the financial year 2012 / 13, the members of the Supervisory Board also receive remuneration related to the company’s
long-term performance. It amounts to € 400 per € 0.01 of the average undiluted earnings per share (EPS ) carried in the consolidated
financial statements for the respective last three financial years. The
long-term variable remuneration is payable for the first time upon
the close of the Annual General Meeting which will vote on the ratification of the acts of management of the Supervisory Board for the
third completed financial year (February 2016 for the financial year
2014 / 15). The payable amount is to be capped at € 50.0 thousand.
I.
TO OUR SHAREHOLDERS
71
The members of the Supervisory Board and the Committees receive
an attendance fee of € 1.0 thousand per meeting. The members of
the Supervisory Board are also reimbursed for necessary travel and
other expenses incurred in connection with their role.
The members of the Supervisory Board are included in any financial
liability insurance policy (D&O insurance) taken out in an appropriate
amount by the company and in its interest. The relevant insurance
premiums are paid by the company. In line with the recommendation
of the German Corporate Governance Code, there is a deductible
for which the Supervisory Board members can take out their own
private insurance.
The remuneration of the Supervisory Board is reviewed at appropriate
intervals. In this regard the expected time required for the relevant
duties and experience in companies of a similar size, industry and
complexity are taken into account.
CAP
The maximum aggregate remuneration for an ordinary Supervisory
Board member on the basis of the current remuneration scheme
including long term variable remuneration (considering the cap
mentioned above) and not including committee memberships, attendance fees or the reimbursement of travel and other expenses, is
€ 100.0 thousand. The remuneration of Supervisory Board members
is determined by the Annual General Meeting and set forth in the
Articles of Association.
At the meeting of the Supervisory Board held on 23 September 2015, it was agreed that a change in respect of Supervisory
Board remuneration should be put to the shareholders at the Annual
General Meeting in 2016. The proposal for consideration by shareholders is that the remuneration of the Supervisory Board will no
longer include a long-term variable element. Further details will be
published with the invitation to the Annual General Meeting mentioned above.
R E M U N E R AT I O N O F T H E S U P E R V I S O R Y B O A R D
T O TA L R E M U N E R AT I O N O F S U P E R V I S O R Y B O A R D
€ ’000
Fixed remuneration
Long-term variable remuneration
Remuneration for committee memberships
Attendance fee
Remuneration for TUI AG Supervisory Board mandate
Remuneration for Supervisory Board mandates in the Group
Total
2014 / 15
2013 / 14
1,081.6
628.3
797.6
306.0
2,813.5
15.5
2,829.0
906.7
235.1
559.6
249.0
1,950.4
74.1
2,024.5
72
TO OUR SHAREHOLDERS
In addition, travel and other expenses totalling € 421.6 thousand
(previous year: € 362.1 thousand) were reimbursed. Total remuner-
ation of the Supervisory Board members thus amounted to € 3,250.6
thousand (previous year: € 2,386.6 thousand).
I I . R E M U N E R AT I O N O F I N D I V I D U A L S U P E R V I S O R Y B O A R D M E M B E R S F O R T H E F I N A N C I A L Y E A R 2 0 14 / 15
R E M U N E R AT I O N O F I N D I V I D U A L S U P E R V I S O R Y B O A R D M E M B E R S F O R F I N A N C I A L Y E A R 2 0 14 /15
€ ’000
Fixed
remuneration
Long-term
variable
remuneration
Fixed
remuneration
for committee
membership
150.0
75.0
115.9
53.2
112.1
72.1
35.0
22.0
413.0
222.3
56.2
50.0
50.0
8.3
50.0
9.9
15.6
38.6
23.1
17.2
38.6
17.8
57.8
80.0
22.0
24.0
8.0
1.0
16.0
2.0
151.6
192.6
81.1
33.2
256.7
29.6
40.1
35.3
40.1
9.9
10.6
10.3
10.6
6.9
6.0
7.0
6.0
6.0
56.8
52.5
56.8
30.7
40.1
50.0
40.1
41.3
50.0
50.0
50.0
50.0
50.0
50.0
35.3
1,081.6
10.6
36.5
0.0
10.7
38.6
22.7
24.6
38.6
38.6
38.6
10.3
628.3
Prof. Dr Klaus Mangold (Chairman)
Frank Jakobi (Deputy Chairman)
Sir Michael Hodgkinson (since 12 December 2014;
Deputy Chairman since 9 February 2015)
Andreas Barczewski
Peter Bremme
Arnd Dunse (until 30 November 2014)
Dr Dierk Hirschel (since 16 January 2015)
Janis Carol Kong (since 12 December 2014)
Michael Pönipp
Timothy Martin Powell (since 12 December 2014)*
Wilfried H. Rau (since 3 December 2014)
Carmen Riu Güell
Carola Schwirn
Maxim G. Shemetov
Anette Strempel
Ortwin Strubelt
Total
6.7
152.1
7.9
33.3
57.8
40.0
25.7
40.0
72.1
40.0
797.6
Remuneration for
Supervisory
Board memberAttendance fee ships in the Group
7.0
14.0
14.0
8.0
21.0
9.0
21.0
16.0
19.0
15.0
7.0
306.0
15.5
15.5
Total
57.8
149.3
111.9
60.0
149.6
81.7
121.3
144.6
179.7
143.6
52.5
2,829.0
* Mr Powell declared to waive his long-term variable remuneration.
The Supervisory Board members who left in the course of the financial year receive their entitlements from the long-term programme
on a pro-rata basis upon the ratification of the acts of management
of the Supervisory Board for the financial year in which they left
during the following Annual General Meeting. The entitlements of
the Supervisory Board members under the long-term remuneration
arrangement are covered by a pro-rata provision. Apart from the
work performed by the employees’ representatives pursuant to
their contracts, none of the members of the Supervisory Board provided any personal services such as consultation or agency services
for TUI AG or its subsidiaries in financial year 2014 / 15 and thus did
not receive any additional remuneration arising out of this.
TO OUR SHAREHOLDERS
73
TUI SHARE PERFORMANCE
Market environment
T U I S H A R E D ATA
In financial year 2014 / 15, the global indices showed strong volatility.
The German share index (DA X ) hit a new record high of more than
12,000 points in April 2015 after a low of 8,572 points at the beginning
of the financial year, on 15 October 2014. The FTSE 100 fluctuated
within a broad bandwidth from 5,899 to 7,104 points from October 2014 to September 2015.
Stock exchange centres
Reuters / Bloomberg
In the period under review, global indices were affected, in particular,
by the discussions around the potential insolvency of Greece. In December 2014, the markets were already nervous as Greece failed to
elect a new president. Market anxiety heightened in the Spring, and
by July 2015, events were virtually affected every day by debates
around a potential exit by Greece from the eurozone (Grexit).
Stock category
Capital stock
Number of shares
Market capitalisation
Market capitalisation
In the period under review, the monetary policy of the central banks
also played a major role. Investors were concerned about the potential
timing of an interest rate turnaround in the US , while the European
Central Bank (ECB ) injected positive stimuli by expanding its asset
purchase programme.
In financial year 2014 / 15, a considerable slump in share prices was
driven by economic developments in a number of key emerging
economies. Following a weak start to calendar year 2015 by the
global economy, in the summer of 2015 the focus again shifted to
disappointing macroeconomic data from China. Speculation about
the state of the Chinese economy was additionally fuelled by the
strongest drop in share prices in the Chinese stock market for more
than eight years in July 2015 and China devaluing its currency several
times within a very short period of time.
Towards the end of the period under review, stock markets again
came under pressure amid fears of a substantial cooling of China’s
economy. The F TSE 100 closed at 6,062 points at the balance sheet
date, down by 8 %. The German indexes delivered a better performance in a volatile environment. The DA X index reported a slight
increase of 3 %, while the MDA X grew by 22 % in the financial year
under review.
30 September 2015
TUAG 00
DE 000TUAG 000
WKN
ISIN
€
bn €
bn GBP
London, Xetra, Hanover
TUIG n.DE /TUI 1.GR
(Frankfurt); TUIT .L/TUI :LN
(London)
Registered ordinary shares
1,499,627,312
586,603,217
9.6
7.1
TUI share price significantly outperforms the
market in the financial year 2014 / 15
In the completed financial year, the TUI share price showed a positive performance. The primary listing on the London Stock Exchange
recorded an increase of 8 %, considerably outperforming the F TSE
100. The secondary listing in Germany rose considerably by 41 %,
while the MDA X increased by 22 % in the same period of time.
The main event at the beginning of financial year 2014 / 15 was the
merger between TUI AG and TUI Travel. The management teams of
the two companies supported the merger plan aimed at creating the
world’s leading tourism business. At the Extraordinary General
Meetings held in October 2014, the shareholders of the two companies approved the merger. The improved growth prospects to be
expected from a steady expansion of the hotel and cruise brands
and the substantial synergies to be delivered by simplifying the Group
structure had convinced both the shareholders and the capital market.
In the months that followed, the TUI share price benefited from the
successful completion of the merger. The share price was also boosted
by sound business performance and an attractive dividend payment.
74
TO OUR SHAREHOLDERS
In May 2015, TUI ’s management team provided an update on the
tourism group’s future growth strategy and the status of integration.
At a Capital Markets Update held in London, the Executive Board of
the TUI Group defined a number of clear strategic milestones to be
achieved by 2018, aimed at enhancing the efficiency and agility of
the Group and accelerating profitable growth.
in Tunisia in late June 2015. TUI ’s top priority was to support its
customers, their families and any employees concerned during this
sad period. Despite these events, the TUI Group achieved strong
growth in underlying EBITA in Q3 2014 / 15, demonstrating the resilience of its integrated business model.
Later in the financial year, the TUI share price did not avoid the
challenging market environment. The share price was impacted by
the debates about the debt crisis in Greece, the potential threat of a
Grexit and the associated effects on the tourism sector. Moreover,
the tourism sector was impacted by a terrorist attack on customers
In the last few weeks of the period under review, the TUI share price
was influenced by opposing trends, with sound operating results
and booking volumes on the one hand and a stock market environment marked by weak economic data on the other. Even during that
phase, the share price remained more stable than its national, closing
at 1,218 pence or € 16.35 at the balance sheet date.
TUI SHARE PRICE (XE TR A)
TUI SHARE PRICE (LONDON)
W I T H M D A X ( FINANCIAL YE AR 2014 / 15 )
W I T H F T S E 1 0 0 ( FINANCIAL YE AR 2014 / 15 )
TUI XETRA in €
MDAX in points
18.50
24,650
16.50
21,650
14.50
18,650
12.50
15,650
10.50
12,650
8.50
9,650
6.50
1.10.2014
TUI XETRA
TUI London in GBp
FTSE in points
1,600
7,400
1,500
7,170
1,400
6,940
1,300
6,710
1,200
6,480
1,100
6,250
1,000
6,020
900
5,790
800
5,560
700
5,330
30.9.2015
17.12.2014*
MDAX
TUI London
30.9.2015
FTSE 100
* Start of Trading at London Stock Exchange
L O N G -T E R M D E V E L O P M E N T O F T H E T U I S H A R E P R I C E ( X E T R A)
€
High
Low
Year-end share price
2010 / 11
2011 / 12
2012 / 13
2013 / 14
2014 / 15
10.86
3.68
3.88
6.97
3.14
6.70
9.85
6.70
9.44
13.88
9.14
11.85
17.71
9.84
16.35
Quotations, indexes and trading
Since 17 December 2014, the primary listing of TUI has been in the
premium segment of the main market on the London Stock Exchange. It was admitted to the F TSE UK series of indexes including
the F TSE 100, the most important British share index. It has additionally been listed in the electronic trading system Xetra and at the
Hanover stock market with a secondary listing.
Among the sustainability, TUI has been listed in the renowned Dow
Jones Sustainability Index (DJSI ) Europe since September 2015,
this being the tenth time in succession. TUI is the only tourism group
TO OUR SHAREHOLDERS
75
that has managed to gain admission to the sustainability index. At this
year’s annual review of the sustainability ranking, TUI scored particularly well in the categories Climate Strategy and Corporate Citizenship. TUI is also listed in the sustainability F TSE 4Good, STOX X
Global ESG Leaders Index, Ethibel Excellence Index and ECPI Ethical
Index €uro and is featured in the CDP Climate Disclosure Leadership
Index in the UK and Germany.
Since the beginning of 2015, the average daily trading volume has
been around one million shares each on the London Stock Exchange
and on Xetra. This reflects strong liquidity in the pound sterling and
euro trading lines.
Analyst recommendations
A N A LY S T S ’ R E C O M M E N D AT I O N S
N U M B E R O F A N A LY S T S
AS AT 30 SEPT 2015
AS AT 30 SEPT 2015
Sell
Sell
4
27
Buy
69
1
Hold
Buy
18
Hold
7
%
For institutional and private investors, assessments and recommendations by financial analysts are a key decision-making factor. In the
financial year under review, around 25 analysts regularly published
studies on the TUI Group. In September 2015, 69 % of analysts issued
a recommendation to “buy” TUI shares, with 27 % recommending
“hold”. 4 % of the analysts recommended “sell”.
Capital stock and number of shares
E MPLOYE E SHARE S
In financial year 2014 / 15, a total of 133,340 employee shares were
issued. At the balance sheet date, the capital stock totalled
€ 1,499,627,311.68, consisting of 586,603,217 no-par value shares
documented by global certificates. The proportionate share capital
attributable to each individual share is around € 2.56. Apart from
subscribed capital, there is also authorised and conditional capital,
as outlined in greater detail in the Notes to the consolidated financial
statements.
See page 161 et seqq.
CONVERTIBLE BONDS
In November 2009, TUI AG had issued a convertible bond with subscription rights with a total volume of around € 218 m. At the end of
the conversion period, the outstanding volume had fallen to € 2 m,
and this was duly redeemed in November 2014.
In March 2011, TUI AG again issued convertible bonds with subscription rights with a total volume of around € 339 m, maturing in 2016,
and a coupon of 2.75 %. In the completed financial year, the TUI
76
TO OUR SHAREHOLDERS
Group decided to redeem this convertible bond early. The principal
amount of € 2 m still outstanding at the end of the conversion period
was redeemed in April 2015.
TUI AG and TUI Travel by a large majority, paving the way for the
For the convertible bond of TUI Travel still outstanding in the period
under review, third-party investors received shares in TUI AG in exchange for shares in TUI Travel for all outstanding bonds. Moreover,
a residual amount from a further convertible bond of TUI Travel still
outstanding at the beginning of the financial year was redeemed as
at the due date. At the balance sheet date, therefore, there were no
conversion rights left from convertible bonds.
Details about the 2015 AGM are available online at:
www.tuigroup.com/en-en/investors/agm
Resolutions of the 2014 Extraordinary General
Meeting and the 2015 Annual General Meeting
creation of the world’s number one integrated tourism business.
The first Annual General Meeting following the successful merger of
the two companies was held in Hanover on 10 February 2015. It was
attended by around 1,720 shareholders and shareholder representatives, representing around 60 % of the voting capital during the
votes. The acts of management of the Executive and Supervisory
Boards of the Company were ratified by large majorities. The AGM
approved the proposal submitted by the Executive Board and Supervisory Board to pay a dividend of € 0.33 per share for the completed financial year.
At the Extraordinary General Meeting held on 28 October 2014, the
TUI shareholders approved the resolutions on the merger between
Shareholder Structure
SHAREHOLDER STRUCTURE
GEOGRAPHICAL SHAREHOLDER STRUCTURE
AS AT 30 SEPT 2015
AS AT 30 SEPT 2015
Switzerland
Riu Hotels S.A.
Institutional
investors
3
78
3
Private investors
6
Alexey
Mordashov
13
EU
64
Other
6
Russia
13
%
%
Some 87 % of all TUI shares were in free float at the end of financial
year 2014 / 15. Around 6 % of all TUI shares were held by private
shareholders, around 78 % by institutional investors and financial
institutions and around 16 % by strategic investors. According to an
analysis of the share register, most shares were held by investors
from EU countries.
USA
14
The latest information on the shareholder structure and voting right notifications
pursuant to section 26 of the German Securities Trading Act is available online at:
www.tuigroup.com/en-en/investors/news
TO OUR SHAREHOLDERS
77
Dividend
DEVELOPMENT OF DIVIDENDS AND EARNINGS OF TUI
€
2010 / 11
2011 / 12
2012 / 13
2013 / 14
2014 / 15
– 0.01
–
– 0.16
–
– 0.14
0.15
+ 0.26
0.33
+ 0.64
0.56
Earnings per share
Dividend
TUI AG ’s profit for the year amounted to € 1,256.7 m. Taking account
of the transfer to other revenue reserves (€ 314.0 m) and the profit
carried forward of € 66.7 m, net profit available for distribution totalled
€ 1,009.4 m. A proposal will be submitted to the Annual General Meeting to use the net profit available for distribution for the financial
year under review to distribute a dividend of € 0.56 per no-par value
share and to carry the amount of € 680.9 m, remaining after deduction
of the dividend total of € 328.5 m, forward on new account.
Rating
The international rating agencies Standard & Poor’s and Moody’s regularly rate the creditworthiness of TUI as a debtor. In December 2014,
Standard & Poor’s Rating Services lifted TUI ’s corporate rating from
“B+” to “ BB –”. S&P attributed the rating upgrade to an improvement
in key indicators in financial year 2013 / 14. It was also attributed to
the merger between TUI and TUI Travel, which had a structurally
advantageous effect on the rating.
In December 2014, Moody’s Investors Service also lifted TUI ’s rating
to “Ba3”. In August 2015, the agency improved its outlook again
from “neutral” to “positive”. Moody’s attributed the rating upgrade
to the reduction in debt after the rating agency had adjusted its
methodology for the measurement of operating leases. A further
positive factor was the improved operating performance despite an
increase in security risks in Tunisia and volatility in Greece.
R AT I N G A G E N C I E S
Standard & Poor’s
Moody’s
Corporate Rating
Outlook
BB –
stable
positive
Ba3
Investor Relations
Open and continuous dialogue and transparent communication form
the basis for confidence in our dealings with shareholders, institutional investors, equity and credit analysts and lenders. Many discussions
were held with TUI shareholders and bondholders; they centred on
Group strategy and the development of business in the various
business sectors, enabling stakeholders to make a realistic assessment of TUI ’s future development.
Apart from the development of business operations in Tourism, Investor Relations in the period under review focused in particular on the
merger between TUI AG and TUI Travel and the growth strategy for
the integrated tourism group.
TUI ’s management team explained these central issues at road shows
in London, Frankfurt, Paris, Zurich, Oslo, Copenhagen, New York and
Boston. The IR team also carried out road shows in Amsterdam,
Brussels and Milan.
Questions from analysts and investors were also discussed at the
conference calls held when the interim reports were published, in
the framework of analysts’ meetings, at many investor conferences in
Europe and the US and at numerous one-to-ones. Many of these
meetings were personally attended by management.
Investor Relations also makes every effort to engage in direct contact
with private investors. The IR team sought dialogue with this target
group on many occasions, such as events organised by shareholder
associations. Another key platform for exchanges with private
shareholders was the IR stand at TUI ’s Annual General Meeting. TUI
also uses its new website to address its private investors. Apart
from the comprehensive information that is made available, all IR
conference calls and the Capital Markets Update were transmitted
live and in full on that website in financial year 2014 / 15.
More details about Investor Relations online at www.tuigroup.com/en-en/investors
Protecting natural resources and taking social responsibility
for our destinations are part and parcel of TUI ‘s corporate
culture. Mexico is no exception. Holbox island and its little
fishing village are in the middle of the biosphere reserve
Yum Balam. Preserving this unspoilt Caribbean holiday idyll
is a matter close to our hearts.
» R E A D M O R E A B O U T M E X I CO A S A LO N G - H A U L D E ST I N AT I O N
IN OUR MAGAZINE UNDER „ ÁNDALE!“
MANAGEMENT
R EPORT *
CO N T E N T S
80
T UI Group Fundamentals
80Structure, business model and
market environment
87Goals and strategies
94Value-oriented Group management
97Risk Report
115Overall assessment by the
E xecutive Board and Report on
expected development
120Report on economic position
120Macroeconomic and industry
framework
122Group earnings
127Business development by segments
135Group net assets
138Financial position of the Group
146Sustainable development
150Human resources
154Annual financial statements
of TUI AG
157Information required under
takeover law
159Report on subsequent events
* T he
present combined Management Report has been
drawn up for both the TUI Group and TUI AG. It was
prepared in accordance with sections 289, 315 and 315 (a)
of the German Commercial Code (HGB) and German
A ccounting Standards (DRS) numbers 17 and 20.
The combined Management Report also includes the
Remuneration Report and the Corporate G
overnance
Report as well as the Two-Year-Table.
80
MANAGEMENT REPORT
T U I G R O U P F U N D A M E N TA L S
Structure, business model and market environment
TOURISM BUSINESS
SOURCE
MARKETS
H OT E L S &
RESORTS
CRUISES
• Northern
Region
• Central Region
• Western Region
• Riu
• Robinson
• Other Hotels
• TUI Cruises
• Hapag-Lloyd
Cruises
SPECIALIST TR AVE L
OT H E R
TO U R I S M
S P E C I A L I ST
GROUP
ALL OTHER SEGMENTS*
H OT E L B E D S
GROUP
• Corporate Center
• Real Estate
* LateRooms Group and Financial stake in Hapag-Lloyd AG (Container shipping) held for sale
TUI Group
O R G A N I S AT I O N A N D M A N A G E M E N T
TUI AG is a stock corporation under German law, whose basic principle
TUI Group is the world’s leading tourism business consisting of
market-leading tour operators, 1,800 travel agencies and leading
online portals, five tour operator airlines with more than 140 aircraft,
over 310 hotels with 214,000 beds, 13 cruise liners and countless incoming agencies in all major holiday destinations around the globe.
This integrated offering will enable us to provide our 20 million customers with an unparalleled holiday experience in 180 regions.
TUI AG structure
is dual management by two boards, the Executive Board and the
Supervisory Board. The Executive and Supervisory Boards cooperate
closely in governing and monitoring the Company. The Executive
Board is responsible for the overall management of the Company.
The appointment and removal of Board members is based on sections
84 et seq. of the German Stock Corporation Act in combination with
section 31 of the German Co-Determination Act. Amendments to the
Articles of Association are effected on the basis of the provisions of
sections 179 et seq. of the German Stock Corporation Act in combination with section 24 of TUI AG ’s Articles of Association.
TUI AG is the Group’s parent company headquartered in Hanover. It
holds directly or, via its affiliates, indirect interests in the principal
Group companies conducting the Group’s operating business in individual countries. Overall, TUI AG ’s group of consolidated companies
comprised 532 direct and indirect subsidiaries at the balance sheet
date, of which 45 were based in Germany and 487 abroad. A further
19 affiliated companies and 33 joint ventures were included in
TUI AG ’s consolidated financial statements on the basis of at equity
measurement.
E XECUTIVE BOARD AND GROUP E XECUTIVE COMMIT TEE
As at the balance sheet date, the Executive Board of TUI AG consisted
of the two Joint CEO s and four other Board members.
Details on Executive Board members see page 38
A Group Executive Committee was set up in order to manage the
TUI Group strategically and operationally. As at 30 September 2015
the Committee consisted of twelve members who meet under the
chairmanship of Joint CEO s Friedrich Joussen and Peter Long.
MANAGEMENT REPORT
81
Western Region
REPORTING STRUCTURE
Due to the merger with TUI Travel PLC , the TUI Group changed its
organisational structure as of 31 March 2015. The previous reporting
structure has been updated to reflect the management structure of
the new TUI Group, in line with IFRS 8. The previous sectors Travel,
Hotels & Resorts and Cruises have been replaced by the following
reporting segments:
The tour operators and airlines in Belgium and the Netherlands
and the tour operators in France are included within the segment
Western Region.
Hotels & Resorts
TUI Group’s tour operating business is clustered into the three geo-
graphical regions. The Northern Region, Central Region and Western
Region represent together with Hotels & Resorts, Cruises and Other
Tourism the Tourism division.
Northern Region
The Northern Region segment comprises the tour operators, airlines
and cruise business in the UK , Ireland and the Nordics. In addition,
the Canadian strategic venture Sunwing and the joint venture in
Russia have been included within this segment.
Central Region
The Hotels & Resorts segment comprises all Group-owned hotels
and hotel companies of the TUI Group. The hotel activities of the
former Travel Sector have also been allocated to Hotels & Resorts.
The segment continues to hold majority participations in hotels, joint
ventures with local partners, companies where TUI holds a fi nancial
stake, enabling it to exert a strong influence, and hotels operated
under management contracts.
In financial year 2014 / 15, Hotels & Resorts comprised a total of
310 hotels with 214,066 beds. At 272 hotels, most hotels are in the
four- or five-star categories. 46 % were operated in the framework
of management contracts, 36 % were owned by the respective hotel
company, 15 % were leased and 3 % of the hotels were managed
under franchise agreements.
The Central Region segment comprises the tour operators and airlines
in Germany and the tour operators in Austria, Switzerland and Poland.
FINANCING STRUCTURE HOTELS & RESORTS
OWNED HOTEL BEDS ACCORDING TO REGIONS
Other
countries
Franchise
3
Management
46
(4)
Lease
15
(5)
26
(50)
%
Ownership
36
(41)
(10)
Caribbean
(28)
%
In brackets: previous year
8
Western
Mediterranean
19
(26)
Eastern
Mediterranean
North Africa /
Egypt
24
23
(13)
(23)
82
MANAGEMENT REPORT
HOTELS & RESORTS
Hotel brand
Riu
Robinson
Iberotel
Other hotel companies
Total
3 stars
4 stars
5 stars
Total hotels
Beds
Main sites
5
–
–
33
38
57
20
15
95
187
42
4
9
30
85
104
24
24
158
310
90,187
14,442
13,406
96,031
214,066
Spain, Mexico, Caribbean, Tunisia, Cape Verdes
Spain, Greece, Turkey, Switzerland, Austria
Egypt, Turkey, Germany
Spain, Greece, Egypt
As at 30 September 2015
RIU
H A PA G - L L O Y D C R U I S E S
Riu is the largest hotel company in the portfolio of Hotels & Resorts.
The Majorca-based enterprise has a high proportion of regular
customers and stands for professionalism and excellent service.
Most of the hotels are in the premium and comfort segments and are
located in Spain, Mexico and the Caribbean.
Hamburg-based Hapag-Lloyd Cruises holds a leading position in the
German-speaking market with its four ships fleet in the luxury and
expedition cruise segments.
ROBINSON
Robinson, the leading provider in the premium club holiday segment,
is characterised by its professional sport, entertainment and event
portfolio. Moreover, the clubs offer high-quality hotel amenities, excellent service and spacious architecture. Most of the hotels are located
in Spain, Greece, Turkey, Switzerland and Austria. The facilities also
meet ambitious standards in terms of promoting sustainable development activities and meeting specific environmental standards.
Its flagships are the five-star-plus vessels Europa and Europa 2. They
were awarded this category by the Berlitz Cruise Guide and are the
world’s only ships to be recognised in this way, in the case of Europa
for the sixteenth time in succession. Europa primarily cruises on world
tours, while her sister ship Europa 2 takes shorter but combinable
routes. The Hanseatic is used, among other destinations, for expedition cruises to the Arctic and Antarctic. It is the world’s only five-star
passenger vessel with the highest Arctic class. The Bremen, a four-star
vessel – also awarded the highest Arctic class – is another expedition
ship travelling to similar destinations. Three of the ships are owned
and one was chartered.
IBEROTEL
Iberotel hotels offer a comprehensive level of comfort and excellent
dining options. Most of these premium hotels are located in Egypt
and Turkey. They offer top-quality products, complying with the
highest quality, safety and environmental standards.
O T H E R H O T E L C O M PA N I E S
Other hotel companies include Majorca-based Grupotel and other
brands such as Jaz and Magic Life, our club brand characterised by
family friendly holiday villages and varied sport and entertainment
programmes.
Cruises
The Cruises segment consists of Hapag-Lloyd Cruises and the joint
venture TUI Cruises.
TUI CRUISES
The Hamburg-based TUI Cruises is a joint venture formed in 2008
between TUI AG and the US shipping company Royal Caribbean
Cruises Ltd., in which each partner holds a 50 % stake. With four ships
so far TUI Cruises is top-ranked in the German-speaking premium
market for cruises. The Berlitz Cruises Guide awarded the Mein
Schiff 4 as World’s best ship in the category “Large Resort Ships“
and her sister ship Mein Schiff 3 second best.
TUI Cruises is planning to take advantage of growth opportunities
and expand its market position by additional newbuilds. The decision to order Mein Schiff 7 and Mein Schiff 8 was taken in September 2015. The commissioning of the newbuilds is planned for 2018
and 2019 and they are to replace Mein Schiff 1 and Mein Schiff 2
respectively. TUI Cruises first two ships are planned to be transferred within TUI Group to Thomson Cruises, currently part of the
UK tour operator reported within Northern Region.
Other Tourism
Other Tourism comprises the French airline Corsair and, in particular,
central Tourism functions such as the TUI Group’s flight control and
information technology departments.
Specialist Travel
The Specialist Group segment and the Hotelbeds Group segment
together form Specialist Travel.
SPECIALIST GROUP
The Specialist Group segment pools more than 100 specialist and
adventure tour operators in Europe, North America and Australia. It
operates under five divisions: Adventure, Education, North American
Specialists, Events and Specialist Holiday Group. It includes tour operators offering market-leading travel experiences and adventures,
tour operators for student trips and language courses, providers of
charter yachts, premium tour operators, and providers of skiing and
other sporting tours.
HOTELBEDS GROUP
The Hotelbeds Group previously was part of the Accommodation &
Destinations sector and comprises B2B hotel portals selling globally
sourced hotel and apartment accommodation online to wholesale
customers such as travel agencies and tour operators via various
Internet portals. The Inbound Services Division manages regional
incoming agencies providing incoming services for tour operators,
such as transfers and liaison with holiday-makers. This Division also
provides wide-ranging services for the cruise industry.
All other segments
Apart from the segments mentioned above, the segment “All other
segments” will also be retained. It combines, in particular, the corporate centre functions of TUI AG and the interim holdings as well as
the Group’s real estate companies. The corporate centre functions
of TUI Travel PLC , previously comprised in the Travel Sector, have
also been allocated to that segment.
The segment of the LateRooms Group has been classified as a discontinued operation. As at October 2015 the platform for travel
services was sold.
The financial stake in Hapag-Lloyd Container Shipping of roughly
13.9 % (as at 30 September 2015) was reclassified to financial assets
available for sale according to IFRS 5 since Q3 2013 / 14.
MANAGEMENT REPORT
83
Market environment and competition in the
tourism businesses
Tourism is our core business. Following the merger between TUI AG
and TUI Travel PLC we have created the world´s number one integrated leisure tourism business. Furthermore, we consider ourselves
to be Europe’s largest leisure hotelier based on capacity. Within our
Tourism segment, we also operate three cruise line businesses,
Thomson Cruises, Hapag-Lloyd Cruises and TUI Cruises.
TOURISM MARKE T
According to the World Tourism Organization (UNW TO), tourism
comprises the activities of persons travelling to and staying in places
outside their usual environment for not more than one consecutive
year for leisure, business and other purposes. The key tourism indicators to measure market size are the number of international tourist
arrivals, and international tourism receipts. With international tourism
receipts reaching $ 1.2 trillion in 2014, the tourism industry is one of
the most important sectors in the world economy. International
tourism (travel and passenger transport) accounts for 9 % of GDP
and for 30 % of the world’s exports of services and 6 % of overall
exports of goods and services. As a worldwide export category,
tourism ranks fifth after fuels, chemicals, food and automotive
products, while ranking first in many developing countries (UNW TO ,
Tourism Highlights, 2015). International tourist arrivals worldwide
are expected to increase by 3.3 % a year between 2010 and 2030 to
reach 1.8 billion by 2030 (UNW TO Tourism Towards 2030).
Travel for leisure, recreation and holidays accounts for just over half
of all international tourist arrivals (53 %). Some 14 % travel for business and professional purposes and another 27 % travel for specific
purposes, such as visiting friends and relatives or health, with the
remaining 6 % travelling for unspecified reasons (UNW TO , Tourism
Highlights, 2015 Edition).
Europe is the largest and most mature tourism market in the world,
accounting for 51 % of international tourist arrivals and 41 % of receipts in 2014. Asia Pacific accounts for 17 % of international tourist
arrivals in 2014. The total increased with a C AGR of + 4 % from 1990
up to 1,133 m tourists in 2014. Five European countries (France,
Spain, Italy, the United Kingdom and G
ermany) figured in the top
ten international tourism destinations in 2014. Our three main
source markets were in the top six of all source markets worldwide
measured by international tourism expenditure.
84
MANAGEMENT REPORT
D E V E L O P M E N T I N T E R N AT I O N A L T O U R I S T A R R I VA L S B Y O R I G I N
+4 %
1,200
1,100
A N N U A L G R O W T H R AT E
1,035
SI NCE 19 9 0
891
1,000
807
900
677
800
700
528
600
434
500
400
300
8
10
8
99
14
15
14
25
19
23
26
28
35
28
26
32
30
33
37
27
33
32
26
32
32
1,133
Origin not specified
Africa
Middle East
Americas
189
178
172
Asia Pacific
156
147
137
268
250
237
206
181
131
9
12
9
108
Europe
153
114
86
59
200
100
948
1,087
250
1990
450
389
303
1995
566
537
497
477
575
M I O .
$
2000
2005
2009
2010
2012
2013
2014
S H A R E O F I N T E R N AT I O N A L
TO U R I S T A R R I VA L S BY O R IG I N
Europe
51
Asia Pacific
Americas
Middle East
17
3
24
Origin not specified
3
Africa
3
%
Germany continues to be the third largest source market in the
world, with international tourism expenditure of approximately
$ 92.2 billion in 2014, after China (approximately $ 164.9 billion) and
the United States (approximately $ 110.8 billion). In terms of expenditure per capita, Germany ranks first globally, with approximately
$ 1,137 spent per G
erman on average in 2014. (source: UNW TO ,
Tourism Highlights, 2015 Edition). Key operators in the German
tourism market are TUI Deutschland, Thomas Cook, DER Touristik,
F TI and Alltours (F V W , Dossier, Deutsche Veranstalter, 2013).
The United Kingdom is the fourth largest source market in the
world, with approximately $ 52.7 billion spent on tourism activities in
2014 and on average $ 893 spent per capita over the same period
(source: UNW TO , Tourism Highlights, 2015 Edition). The British
tourism market is characterized by a high degree of concentration,
with two key operators: TUI Group and Thomas Cook (Mintel, European Leisure Travel Industry, September 2013).
France is the sixth largest source market in 2014, with international
tourism expenditure of approximately $ 42.9 billion (source: UNWTO,
Tourism Highlights, 2015 E dition). TUI is the market leader in France
MANAGEMENT REPORT
85
with its two main tour-operator brands, Nouvelles Frontières and
Marmara. Thomas Cook is second-ranked in the French tour-operator
market (Mintel, European Leisure Travel Industry, September 2013).
France is the largest destination market in the world, with over
83.7 million tourists in 2014.
HOTEL MARKE T
The total worldwide hotel market was € 385.5 bn in 2014 (business
and leisure market). It is estimated to grow with a C AGR of 6.4 % by
2018 (Euromonitor; June 2015). The hotel market is divided between
business and leisure travel. A number of characteristics differentiate
leisure travel hotels from business hotels, including longer average
lengths of stay for guests in leisure hotels, varying locations of hotels
(e. g. cities or leisure resorts) as well as hotel amenities and service
requirements. From a demand perspective, the leisure hotel market
in Europe is divided into several smaller submarkets which cater to
the individual needs and demands of tourists. These submarkets
include premium, comfort, budget, family / apartment, and club or
resort style hotels. Hotel companies can offer a variety of hotels
across different sub-markets because they are often defined by
price range, star ratings, exclusivity, or available facilities.
H O T E L M A R K E T, R E TA I L VA L U E
500
+6 %
U N T IL 2018
436.7
450
385.5
344.1
400
350
300
250
200
493.5
A N N U A L G R O W T H R AT E
309.0
5.1
8.1
15.7
25.5
5.5
9.7
16.1
30.7
6.1
11.4
18.8
6.8
13.5
22.4
Australasia
Eastern Europe
Middle East and Africa
Latin America
56.0
North America
45.8
37.2
119.6
109.4
Western Europe
98.2
86.8
77.9
116.8
110.5
150
105.4
103.2
100.6
Asia Pacific
128.3
100
50
7.8
15.8
26.7
B N .
76.1
2010
€
108.4
92.1
2012
Consumers in our three main source markets prefer the following
destinations:
Germany: The most popular leisure hotel destinations for consumers
in the German source market are Spain, Italy, Turkey, Austria, Croatia,
2014
150.8
2016 FC
2018 FC
France, Poland and Greece (source: Mintel, European Leisure Travel
Industry, September 2013). Turkey is expected to be the highest
growing market with a C AGR of 13.6 % to 2018 while Italy is the
biggest market in terms of size with a volume of € 22.9 bn retail value
(Euromonitor, June 2015).
86
MANAGEMENT REPORT
United Kingdom: The most popular leisure hotel destinations for
consumers in the United Kingdom source market are Spain, France,
the United States, Italy, Greece, Portugal and Turkey (Mintel, European Leisure Travel Industry, September 2013).
France: The most popular leisure hotel destinations for consumers
in the French source market are Spain, Tunisia, Morocco, Greece and
Turkey (Mintel, European Leisure Travel Industry, September 2013).
Hotel operations can generally be divided into (i) asset owners,
whose primary business is to own real estate a ssets; (ii) brand owners
and operators who typically manage hotel assets themselves or enter
into franchising arrangements with independent operators who, in
turn manage the hotel property assets; and (iii) independent
operators combining the operations of asset owners and brand
owners and operators by managing diverse assets under different
brands, often through franchise agreements.
The upper end of the leisure hotel market is characterized by a high
degree of sophistication and specialization among large international
companies and investors. There are also a large number of small, often
family-run businesses, particularly in Europe, with less sophistication
and fewer financial resources. Most family-owned and operated
businesses are not branded and customers cannot typically access
these hotels through global distribution systems. Given the variety
of models under which leisure hotels are owned and operated and the
fragmented competitive landscape which, at least in Europe, is not
dominated by large hotel chains, conditions differ greatly between
locations.
CRUISE MARKET
The global cruise industry is expected to generate approximately
$ 39.6 billion of revenue in 2015 – a 6.9 % increase over 2014 with
22.2 million passengers carried each year (Cruise Market Watch
website, www.cruisemarketwatch.com/market-share). The North
American market is by far the largest and most mature cruise market
in the world, with approximately 13 million guests in 2015 and a
strong penetration rate of 3.4 % of the total population taking a
cruise in 2014. By contrast, the European cruise markets showed
approximately 6.4 million European passengers and, on average, a
penetration rate of only 1.0 % in 2014, with penetration rates varying
significantly from country to country (CLIA Europe Statistics and
Markets, 2014).
The United Kingdom, France and Germany are among the five largest
cruise markets in Europe (Mintel, Cruises – International, June 2014).
W O R L D W I D E C R U I S E PA S S E N G E R S B Y S O U R C E R E G I O N A N D P E N E T R AT I O N R AT E 2 0 14
South
America
3
P E N E T R AT I O N R AT E
Australia –
New Zealand
4
2014
Asia
9
4.0
3.4
3.5
3.0
%
North
America
59
2.2
2.5
Europe
26
2.0
1.5
1.0
1.0
%
0.5
US
Germany, largest cruise market in Europe, reached 1.8 million passengers in 2014 and, at 2.2 %, showed a lower penetration rate than the
United Kingdom (CLIA Europe Statistics and Markets, 2014). The
United Kingdom is the second largest cruise market in Europe, with
approximately 1.6 million cruise passengers in 2014 and the strongest
penetration rate (2.4 % of the British population took a cruise in
2.4
Europe
Germany
UK
2014, well above the European average) (CLIA Europe Statistics and
Markets, 2014). France, the fourth largest cruise market in Europe,
had approximately 0.6 million cruise passengers in 2014. The French
cruise market is characterized by a lower penetration rate, with only
0.9 % of the population boarding a cruise in 2014 (CLIA Europe Statistics and Markets, 2014).
The European cruise market is divided into submarkets that cater to
a variety of customers: budget, discovery, premium and luxury.
Cruise operators utilize different cruise formats to target these submarkets and the unique demands of their customers. For example,
Hapag-Lloyd Cruises, Deilmann and Phoenix are all active in the
premium cruise submarket, Compagnie du Ponant Cruises is active
in the French luxury cruise submarket, and Hapag-Lloyd Cruises is
the exclusive operator in the German luxury submarket. In addition
to traditional formats, operators offer club ship cruises (such as
AIDA ) or more contemporary oriented cruises (such as TUI Cruises)
in the premium cruise submarket. As a cruise ship is often perceived
as a destination in itself, cruise companies compete, in particular,
within the luxury and premium cruise submarkets, with other destinations such as leading hotels and resorts.
MANAGEMENT REPORT
87
Brand
The TUI Group offers strong brands in all its sectors. In our view, the
strength of our brands in all tourism source markets in Europe and
in the destinations provides us with a significant competitive edge
over our peers. In a survey carried out in 2015, TUI was again rated
as the most trusted travel brand in Germany and Austria (source:
Reader’s Digest Trusted Brands 2015). TUI has also achieved the
strongest growth in brand value of all companies included in a study
conducted by the internationally renowned brand consultancy Interbrand to rank the most valuable German brands in 2015. TUI ’s
brand value grew by 43 % to € 1.4 bn euros. In analysing TUI , Interbrand’s brand experts emphasize the fact that the Group will
achieve a greater presence and gain continuity due to the ongoing
pooling of all services and sub-brands under the TUI brand.
Goals and strategies
Merger of TUI AG and TUI Travel
The merger of TUI AG and TUI Travel PLC in December 2014 created
the world’s leading Tourism business, combining the premium leisure
hotel and cruise brands of TUI AG with the strong marketing and
sales capabilities, modern and efficient airline fleet, inbound services
network and unique holiday concepts of TUI Travel. This has resulted
in a vertically-integrated Tourism business model completing our
progression from predominantly being a trading business, to being a
branded consumer services group with a strong focus on exclusive
hotel and cruise content. We will set new standards in our industry
with respect to growth, quality as well as brand promise and will
create significant opportunities for shareholders, customers, suppliers
and our employees. We deliver an unparalleled customer proposition
and increased value for shareholders.
88
MANAGEMENT REPORT
O U R V E R T I C A L I N T E G R AT E D B U S I N E S S M O D E L
Marketing & Sales
» 20 m customers
Flight
» 13 m customers
I N T E G R AT E D
P L AT F O R M S
Hotels &
Cruises
» 7 m customers
I N T E G R AT E D
MANAGEMENT
Our business model differentiates us through scale and leading positions at all stages of the customer journey: Marketing & Sales, Flight,
Inbound Services and Accommodation. This, and the combination
of our TUI power brand, our local roots and local market expertise,
with a strong central IT platform, defines our uniqueness.
The benefits of a vertically-integrated model are clear:
• We control the end-to-end customer journey, from inspiration and
advice, to booking, flight, inbound services and accommodation.
This differentiates us from the competition and gives us the
knowledge and ability to provide the holiday experiences that our
customers desire, resulting in sustainable, profitable top-line
growth through growth in customer volumes, revenue per customer
and retention.
• Having our own hotels and cruise ships gives us the ability to differentiate our products and means that we control quality, customer
satisfaction and can fulfil customer demand for destinations and
experiences where content is scarce.
Inbound Services
» 11 m customers
• Growth is accelerated and de-risked as a result of the integration
of content with distribution – we can grow our hotels, concepts
and cruise ships with the knowledge that we have direct access to
the customer through our own strong marketing and sales network.
• Significant corporate and operational synergies will also be delivered as a result of vertical-integration – for example, occupancy
in our own hotels has already improved as a result of the merger.
Our organisational structure
The post-merger integration is progressing smoothly and with a
faster pace than originally anticipated. We have therefore accelerated
organisational change, implementing a flat structure to enable fast
and agile decision-making and clearly separating our Tourism business
from our other businesses (Specialist Travel and Hapag-Lloyd AG ,
the latter being a financial asset available for sale).
TOURISM BUSINESS
NORTHERN REGION
H OT E L S & R E S O R T S
CENTRAL REGION
CRUISES
W E ST E R N R E G I O N
INBOUND SERVICES*
Platforms (aviation & customer / IT )
MANAGEMENT REPORT
89
SPECIALIST TR AVE L
H OT E L B E D S G R O U P
S P E C I A L I ST G R O U P
HELD FOR SALE
Hapag-Lloyd AG
* From 2015 / 16
This structure enables us to focus on growing our integrated tourism
business whilst managing our other businesses for both growth and
value. The structure of our Tourism business is balanced between
local management tailored to the different characteristics of our three
regions, Hotels & Resorts, Cruises and Inbound Services divisions,
with the scale and efficiency achieved through our global platforms.
Taking TUI to the next level: The world’s leading
Tourism business
W H AT W E W A N T T O A C H I E V E – O U R G R O W T H L E V E R S
The following growth levers form the basis to deliver increased
shareholder returns:
•
•
•
•
Deliver Tourism growth
Maximise growth & value of our other businesses
Deliver merger synergies
Balance sheet strength, flexibility and strong cash flow generation
90
MANAGEMENT REPORT
OUR GROWTH LEVERS
D E L I V E R TO U R I S M G R O W T H
Marketing &
Sales
Flight
Inbound
Services
Hotels &
Cruises
Integrated
platforms
Unparalleled
customer
PROP OSITION
Integrated
management
M A X I M I S E G R O W T H & V A L U E O F O U R OT H E R B U S I N E S S E S
Increased
shareholder
DELIVER MERGER SYNERGIES
RETURNS
ALANCE SHEET STRENGTH, FLEXIBILITY AND STRONG FREE
B
C A S H F L O W G E N E R AT I O N
Deliver tourism growth
MARKETING & SALES
Our Source Markets (including our joint ventures) sell holidays to
over 20 million customers per annum. Our goal is to achieve profitable
top-line growth ahead of the market. In 2014 / 15 we achieved 2 %
growth in Source Market customers, with 5 % growth in the UK and
Benelux offset partly by capacity reductions in the Nordics and
France and a lower growth rate in Germany.
We are capitalising on the strength of the TUI brand on a global
scale. A global brand experience and a global brand identity offer
many advantages for our customers, suppliers and for our employees.
The appeal of TUI and the Smile logo are extremely high. OneBrand
offers significant opportunities in terms of growth potential, consistency of customer experience, digital presence, operational efficiency
and competitive strength. In the long run, it is our objective that there
will be one brand wherever it is reasonable, but we will still ensure
that we maintain our local roots. We launched our brand migration
successfully in the Netherlands in October 2015, and we are already
achieving strong unaided awareness of the TUI Brand in this source
market. The TUI brand roll-out has also commenced in France, with
Belgium, Nordics and the UK to follow over the next few years.
Control over distribution continues to be central to our marketing
and sales strategy, and all Source Markets are focused on delivering
more direct, and online sales. In 2014 / 15 controlled distribution
grew by two percentage points to 70 %. Online distribution grew by
three percentage points to 41 %. Good progress was made across all
source markets.
In order to grow ahead of the market, we are also broadening our
offering in existing source markets. This includes long-haul expansion,
offering more choice of flight times and durations for our unique
holidays. Our long-haul package customers grew by 8 % in 2014 / 15.
In addition, new source markets will deliver additional growth and
will be accessed by our scalable technology platform, already
launched in Spain and soon to be launched in Portugal and Brazil,
providing us with a straightforward route to market entry. Tapping
the long-tail market will further enhance opportunities for Group
hotels to increase occupancy.
We will also continue to focus on improving earnings in underperforming source markets and driving improvements in operational
efficiency.
FLIGHT
We have around 140 aircraft operated by five tour operator airlines,
flying around 13 million customers per annum. These airlines have
until recently been run separately. We are now changing that structure. Together, our airlines would rank as the seventh largest airline
operation in Europe, with high rates of asset utilisation due to our
integrated model. We want to future-proof our airlines, and this will
only be possible if we leverage the potential economies of scale.
The way our five airlines are operating will further improve as we are
building a competitive aviation platform. In essence, we are building
a virtual airline. This means that we will act ’as one’ wherever it
makes sense to do so, maintaining local differences where the benefit
of that differentiation is greater than that of harmonisation. Organisational structure, the business model and scale are the main elements of our central platform. We expect to benefit in the areas of
aircraft purchasing and financing, engineering and maintenance, IT
and joint long-haul planning and procurement.
We are the only leisure airline operating the Boeing B787 Dreamliner
which is a key differentiator on long-haul destinations. As the B787
is providing us with significant commercial benefits, we are growing
our B787 fleet. Flying in a B787 delivers an enhanced customer experience as well as cost efficiency due to lower fuel consumption than
similarly sized aircrafts. Consequently, the B787 opens up new destinations, adding to our significant and growing long-haul presence.
INBOUND SERVICES
Our unique inbound service brings our brand alive. We have implemented one service team and a single strategic customer platform
for all the tourism activities within the TUI Group. Inbound service
is currently operating in more than 100 destinations with over
6,500 employees with access to 11 million customers. From 2015 / 16,
the inbound services business will start to be integrated within
tourism. We are delivering our differentiation strategy in all the destinations. We are enhancing customer experience, sales, margin and
people engagement and, in parallel, reducing cost of sales and overheads which all contributes to an increased margin profile. As an
integral element of our seamless approach based on world class
customer platforms we are offering joint operations for transfer,
management and transport and we offer differentiated, local experience excursions.
MANAGEMENT REPORT
91
G R O W T H I N A C C O M M O D AT I O N – C O N T E N T A S K E Y
D I F F E R E N T I AT O R
We currently accommodate over 7 million customers per annum in
our own hotels and cruise ships. Growth in accommodation will be
key in driving profitable top-line growth. This is driven by three
elements: Growth in our strong hotel and club brands, growth in our
powerful and exclusive international hotel concepts and profitable
growth in cruises.
G R O W T H I N A C C O M M O D AT I O N – H O T E L S A N D
I N T E R N AT I O N A L C O N C E P T S
We have identified further growth potential through the internationalisation of TUI ’s owned and controlled hotel brands and exclusive
hotel concepts. In addition, new, exclusive hotel projects are to be
developed and operated in prime locations.
Our strategic focus within TUI Hotels & Resorts is to achieve further
differentiation and optimisation of our own hotel portfolio and a
more focused and defined brand profile. The core brands will be Riu,
Robinson, Magic Life and the new hotel brand TUI Blue. The offering will be rounded off by the internationalisation of three hotel
concepts – Sensatori, Sensimar and Family Life.
Hotel brands and hotel concepts differ in that the brands will be
managed by TUI as the hotel operator, while the hotel concepts may
also be adopted by other hotel operators for their hotels. For our
hotel activities, we are planning to create strong volume growth in
content. We are targeting around 60 new hotels by 2018 / 19.
Riu is TUI Group’s largest hotel brand, characterised by excellent
service, location and quality. It is our strategy to continue to grow
the highly profitable brand. In addition to the attractive portfolio of
more than 100 hotels, we opened three new hotels in 2014 / 15 in
Aruba, Bulgaria and Germany and one new resort in Mauritius.
Expansion to new destinations will be an important growth lever,
particularly on long-haul. Adding to the existing long-haul presence
of Riu, four more new hotels are scheduled to open in 2015 / 16 and
2016 / 17 in the Dominican Republic, Sri Lanka, Jamaica and Mexico.
Further growth will be achieved by ongoing portfolio optimisation
and facility refurbishment.
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MANAGEMENT REPORT
TUI Blue is our new hotel brand focusing on differentiation and
quality. As a distinctive customer proposition, it offers a premium
all-inclusive concept. In addition to new hotels, there will be repositioning of some existing underperforming hotel brands to deliver
turnaround. We held an operational trial in Summer 2015 at a former
Iberotel in Sarigerme and we will formally launch this hotel plus one
other currently in our portfolio under the TUI Blue brand in
May 2016, followed by the launch of a resort in Tuscany towards the
end of 2016. A further twelve hotels are currently under negotiation
for launch in 2015 / 16.
Robinson and Magic Life will be the core focus for our growth in clubs.
Robinson is our professional offering of sport, entertainment and
programmed events. In terms of growth levers, Robinson will focus
on increased source market distribution, increased direct distribution
globally and international expansion. We opened one new club in
Tunisia in 2014 / 15 and have four more openings scheduled in
2015 / 16 and 2016 / 17 in Turkey, Greece and the Maldives, with
several more opportunities under negotiation.
Magic Life is characterised by family-friendly holiday villages, varied
sport and international entertainment programmes. A strong integration with source markets has already led to a significant increase
in occupancy. For future growth, Magic Life will benefit from a further
internationalisation of concept through source markets and increased distribution globally. We launched new Magic Life clubs in
Ibiza and Rhodes this summer.
Furthermore, we will grow our powerful and exclusive hotel concepts
through internationalisation. Sensatori, Sensimar and Family Life are
our outstanding international hotel concept brands designed for specific customer segments. With more than 100 hotels captured under
these brands, there is a strong base which differentiates our local
market offering. The internationalisation of the existing Sensatori
and Sensimar brands and introduction of Family Life is being
launched for Summer 2016.
In 2015 we launched two new Sensatoris and two new Sensimars,
which are operated by Group hotels.
G R O W T H I N A C C O M M O D AT I O N – C R U I S E S
We expect the planned expansion of our fleet to enable us to become
one of Europe’s leading cruise companies.
TUI Cruises currently operates four ships in the high growth, underpenetrated premium German market. We have a strong competitive
advantage, having secured additional capacity, with four further
ships ordered and one being delivered in each of the coming four
years. In the UK Thomson Cruises operates a five ship fleet, which
we intend to fully modernise in the next few years, starting with the
new Thomson Discovery in Q2 2016. It is also intended that, with the
delivery of Mein Schiff 7 and 8 to TUI Cruises, Mein Schiff 1 and 2
will be moved to Thomson Cruises, leaving TUI Cruises with a six
ship fleet and enabling the modernisation of the Thomson fleet.
With Hapag-Lloyd Cruises, we continue to focus on luxury and expedition cruises. The successful repositioning of the brand has been
completed and the turnaround was delivered this year.
I N T E G R AT E D P L AT F O R M S , I N T E G R AT E D M A N A G E M E N T
Our platform development is focussed on customer experience, which
in turn will drive profitable top-line growth. Our central mobility and
online platforms continue to evolve. In addition, we are implementing
a SAP -based central customer platform which will collate all information on our customers across their journey, providing a single view
of the customer; and we are also implementing our eCRM platform
which will support strategic marketing.
We have a strong management team with experienced commercial
leaders. By integrating our management team, we are making
joined-up decisions across the business, ensuring that we deliver
our common goal of achieving profitable top-line growth.
Maximise growth and value the segment
Specialist Travel
M A X I M I S I N G T H E G ROW T H A N D VA LU E O F H OT E L B E D S G RO U P
AND SPECIALIST GROUP
Due to their different business models and strategies, Hotelbeds
Group and Specialist Group are operated independently from the
Tourism Business. Managing them separately enables us to focus
more effectively on maximising their growth and value.
Hotelbeds Group is the global number 1 in the B2B accommodation
wholesale space with operations in over 100 countries. This market
position has been achieved predominantly by growing the business
organically and we continue to outperform the market, delivering
over 20 % per annum T T V growth in recent years. In financial year
2014 / 15 the bedbank delivered 26 % T T V growth and 18 % growth
in roomnights.
The separation of Inbound Services has commenced and following
their integration into the Tourism Business, Hotelbeds Group will be
run as an independent business. This approach provides us with full
flexibility and we are evaluating all our options how to best proceed
with the strategy to maximise the growth and value of the Hotelbeds
Group, including potential disposal. In the meantime, we continue
to target 15 % – 20 % CAGR in underlying EBITA over the next
three years.
The Specialist Group is run to maximise value, focussing on opportunities to improve the performance of their portfolio of businesses.
Underlying EBITA increased by € 11 m in the financial year 2014 / 15,
with an improvement in all divisions. In July 2015 we announced with
the founders of Intrepid Travel that we would end the PE AK strategic venture, enabling us to focus on our adventure travel offering
more effectively. We target underlying EBITA C AGR for Specialist
Group in line with the Tourism Business over the next three years.
L AT E R O O M S G R O U P
We took the strategic decision this year to exit the LateRooms
Group as it was non-core to our Tourism strategy. The operational
business of AsiaRooms was closed down during the second quarter
2014 / 15, and Malapronta was closed during the third quarter. The
sale of LateRooms.com was completed in October 2015.
Deliver merger synergies
Although the key rationale for the merger of TUI AG and
TUI Travel PLC was growth, significant synergies are also expected.
The integration of our two businesses is on track and already delivering results. In 2014 / 15 we have updated our assumptions on
expected synergies and one-off integration costs.
Due to further reorganisation measures initiated, corporate streamlining is now expected to deliver cost savings of € 50 m (previously
€ 45 m) per annum from 2016 / 17, mainly from the consolidation of
overlapping functions. We have delivered € 10 m savings in 2014 / 15.
Against the backdrop of measures implemented, estimated one-off
integration costs of € 35 m (previously € 45 m) are expected in order to
achieve these savings, € 31 m of which have been incurred in 2014 / 15.
Our unified ownership structure enables a more efficient tax grouping
and use of carried forward tax losses. A profit & loss transfer agreement between TUI AG and Leibniz-Service GmbH was approved by
our shareholders in February 2015. This enabled immediate corporate
restructuring for tax purposes. As a consequence, the Group’s underlying effective tax rate has reduced to 25 %. There are no restructuring or one-off costs in relation to achieving this synergy.
We also expect to deliver further synergies due to joint management
of occupancy by source markets and group hotels. Occupancy is expected to improve by 5 percentage points by 2016 / 17 as a result of
integration. In 2014 / 15 we delivered a 1.7 percentage point improvement, equating to approximately € 10 m underlying EBITA benefit
on the basis outlined at the time of the merger. We do not expect any
restructuring or one-off costs in relation to achieving this synergy.
There is only minimal risk attached to this synergy as TUI Travel’s
acquisition of Magic Life successfully demonstrated.
Additional (net) cost savings of at least € 20 m per annum are expected from the integration of Inbound Services into the Tourism Businesses. Due to a lower estimated tax burden from the restructuring
of legal entities, estimated one-off cash costs in order to achieve
MANAGEMENT REPORT
93
these savings have declined by roughly € 6 m to approximately
€ 69 m (including P&L, capex and tax costs). There is a minimal risk
to achievement – our cost savings target is already de-risked. The
separation of legal entities and IT functions from Hotelbeds commenced at the start of financial year 2015 / 16.
Balance sheet strength, flexibility and strong cash
flow generation
FOCUS ON BAL ANCE SHEET STRENGTH AND STRONG FREE
C A S H - F L O W G E N E R AT I O N
We have clearly stated strategic goals to improve free cash flow and
therefore deliver superior returns on investment for shareholders.
Our growth strategy will reflect these goals, with the aim of creating
a strong, flexible balance sheet and enhanced cash flow generation.
TUI Group has the right balance sheet structure for growth. We intend
to support long-term growth through the operation of a flexible,
asset-right business model. In order to operate more efficiently and
maximise the value of our assets, we will continue to optimise the
ownership structure of existing and new hotels and cruise ships. We
are convinced that our asset-right strategy gives a balance of risk
and returns. Capex will reflect our growth plans.
Thanks to the sustained reduction in group debt, we have further
strengthened our financial stability and flexibility. We are also committed to a strict focus on SDI management and to improve our
credit metrics following the delivery of merger synergies and the
execution of our growth roadmap. Our focus on rating will allow us
to obtain optimal financing conditions. We have therefore set financial stability targets based on an leverage ratio of 3.5 to 2.75 times
earnings (3.0 times in 2014 / 15), and an interest coverage ratio of
4.5 to 5.5 times interest (4.7 times in 2014 / 15).
With the increase in our operating profitability, the clearly noticeable
decline in interest payments due to the reduction in Group debt and
the more efficient tax grouping, we are committed to a progressive
dividend policy. Dividends are expected to grow in line with the
growth in underlying EBITA at constant currency, with an additional
10 % in 2014 / 15 and 2015 / 16 as outlined at the time of the merger.
We are pleased to have announced our dividend of 56 cents per share
in respect of 2014 / 15, reflecting the strong growth in underlying
earnings this year, and calculated off the 2013 / 14 base of 44.5 cents
per share, including the TUI Travel PLC interim dividend.
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MANAGEMENT REPORT
W H AT W E W A N T T O A C H I E V E : T H E W O R L D ’ S L E A D I N G T O U R I S M
BUSINESS
TUI Group is on course to meet its strategic and commercial objectives, with a strong and sustainable business model and exciting
growth prospects:
• Profitable top-line growth ahead of the market (greater than 3 %)
• At least 10 % underlying EBITA C AGR over the next three years
to 2017 / 18
• Committed to progressive dividend growth
Based on our growth levers, our balance sheet strength and strong
cash flow generation, we believe TUI Group is a compelling investment case with strong prospects for delivering increased shareholder
returns.
Research and development
As a tourism service provider, the TUI Group does not engage in
research and development activities comparable with manufacturing
companies. This sub-report is therefore not prepared.
Value-oriented Group management
Management system and Key Performance
Indicators
As the world’s leading tourism business with a global brand, an
attractive hotel portfolio, a growing cruise business, a modern and
efficient aircraft fleet and direct access to more than 20 million customers, we aim to secure our vertically integrated business model
by means of profitable growth and achieve a sustainable increase in
the value of the TUI Group.
A standardised management system has been created to implement
value-driven management across the Group as a whole and in its individual business segments. The value-oriented management system
is an integral part of the consistent Group-wide planning and controlling process.
Key management variables used for regular value analysis are Return
On Invested Capital (ROIC ) and absolute value added. ROIC is compared with the segment-specific cost of capital. ROIC is calculated
as the ratio of underlying earnings before interest, taxes and amortisation of goodwill (underlying EBITA ) to average invested interest-
bearing invested capital (invested capital) for the segment.
Our definition of EBITA is earnings before interest, taxes, net interest
expenses and expenses for the measurement of interest hedging
instruments as well as impairments of goodwill. While EBITA includes amortisation of intangible assets, it does not carry the at
equity result of our investment in container shipping as our stake in
Hapag-Lloyd AG is a pure equity investment without an operating
character.
The indicator we use in order to explain and assess the TUI Group’s
operating performance is underlying EBITA adjusted for special
one-off effects. It is adjusted for gains on disposal of financial assets,
restructuring expenses, primarily scheduled amortisation of intangible
assets from purchase price allocations and other expenses for and
income from one-off items.
In the framework of our growth strategy, we aim to achieve an underlying EBITA C AGR of at least 10 % over the next three years on a
constant currency basis.
In order to follow the development of business in our segments in the
course of the year, we monitor the financial indicators turnover and
EBITA , but also non-financial performance indicators, such as customer numbers in our tour operators, and capacity or passenger days,
occupancy and average prices in Hotels & Resorts and Cruises
segments. In the framework of our sustainability reporting, we have
also defined a target indicator for specific CO 2 emissions per passenger kilometre for our airlines. We measure achievement of that
indicator on an annual basis.
Information on operating performance indicators is provided in the sections on
“Business development by segments” (page 127) and “Environment” (page 146)
and in the Report on expected developments (page 115).
MANAGEMENT REPORT
95
Cost of capital
C O S T O F C A P I TA L ( WA C C )
Tour operator
2014 / 15
Hotels
2014 / 15
Cruises
2014 / 15
TUI Group
1.50
9.86
6.00
1.6426
11.36
4.02
1.20
2.82
52.77
47.23
7.25
29.83
15.72
4.02
52.77
47.23
10.25
1.50
6.48
6.00
1.0807
7.98
4.02
1.20
2.82
73.08
26.92
6.50
29.83
11.05
4.02
73.08
26.92
9.25
1.50
6.56
6.00
1.0927
8.06
4.02
1.20
2.82
69.80
30.20
6.50
29.83
11.14
4.02
69.80
30.20
9.00
1.50
8.94
6.00
1.4904
10.44
4.02
1.20
2.82
58.19
41.81
7.25
29.83
14.51
4.02
58.19
41.81
10.00
2014 / 15
%
Risk-free interes rate
Risk adjustement
Market risk premium
Beta factor 1
Cost of equity after taxes
Cost of debt capital before taxes
Tax shield
Cost of debt capital after taxes
Share of equity 2
Share of debt capital 2
WACC after taxes3
Tax rate
Cost of equity before taxes
Cost of debt capital before taxes
Share of equity 2
Share of debt capital 2
WACC before taxes 3
1
2
3
Segment beta based on peer group, group beta based on weighted segment betas
Segment share based on peer group, group share based on weighted segment shares
Rounded to 1/4 percentage points
The cost of capital is calculated as the weighted average cost of
equity and debt capital ( WACC ). While the cost of equity reflects the
return expected by investors from TUI shares, the cost of debt capital
is based on the average borrowing costs of the TUI Group. The cost
of capital always shows pre-tax costs, i.e. costs before corporate
and investor taxes. The expected return determined in this way
corresponds to the same tax level as the underlying earnings included in ROIC .
for invested interest-bearing capital (invested capital) for the relevant
segment. Given its definition, this performance indicator is not influenced by any tax or financial factors and has been adjusted for
one-off effects. From a Group perspective, invested capital under
the financing approach is derived from liabilities, comprising equity
including non-controlling interests and the balance of interest-bearing liabilities and interest-bearing assets. The cumulative
amortisations of purchase price allocations are then factored in to
invested capital.
ROIC and economic value added
Apart from ROIC as a relative performance indicator, economic value
added is used as an absolute value-oriented performance indicator.
Economic value added is calculated as the product of ROIC less associated capital costs multiplied by interest-bearing invested capital.
ROIC is calculated as the ratio of underlying earnings before interest,
taxes and amortisation of goodwill (underlying EBITA ) to the average
96
MANAGEMENT REPORT
ROIC AND VALUE ADDE D TUI GROUP
2014 / 15
2013 / 14
restated
2,417.3
3,500.0
2,523.6
572.9
3,966.6
3,542.4
500.0
4,254.5
1,069.0
25.13
10.00
643.5
2,530.2
3,502.7
3,004.6
514.1
3,542.4
3,568.1
500.0
4,055.3
869.9
21.45
10.00
464.4
€ million
Equity
Interest bearing financial liability items
Financial assets
Purchase price allocation
Invested Capital
Invested Capital Prior year
Seasonal adjustment1
Ø Invested capital2
Underlying EBITA
ROIC %
Weighted average cost of capital ( WACC )%
Value added
1
2
Adjustment to net debt to reflect a seasonal average cash balance
Average value based on balance at beginning and year-end
For the TUI Group, ROIC was up by 3.7 percentage points on the
previous year at 25.1 %. With the cost of capital at 10.0 %, this meant
positive economic value added of € 643.5 m (previous year € 464.4 m).
Risk Report
MANAGEMENT REPORT
97
RISK REPORT
Successful management of existing and emerging risks is critical to
the long-term success of our business and to the achievement of our
strategic objectives. In order to seize market opportunities and leverage the potential for success, risk must be accepted to a reasonable
degree. Risk management is therefore an integral component of the
Group’s Corporate Governance.
As with many of the Group functions and processes, the financial year
2014 / 15 has been a year of transition following the merger of
TUI AG and TUI Travel PLC in December 2014. However given that
both of the companies had strong risk management cultures, it has
been a period of gentle evolution as opposed to wholesale revolution.
The evolution has involved identifying the strengths in each of the
previous risk management processes to create a unified process and
framework which continues to apply best practice principles and
satisfies both German and UK legal and regulatory requirements.
Our revised risk governance framework, which is aligned to and
embedded within our business planning cycle, is set out below.
Risk governance framework
S T R AT E G I C D I R E C T I O N A N D R I S K A P P E T I T E
The Executive Board, with oversight by the Supervisory Board, determines the strategic direction of the TUI Group and agrees the nature
and extent of the risks it is willing to take to achieve its strategic
objectives.
To ensure that the strategic direction chosen by the business represents the best of the strategic options open to it, the Executive
Board is supported by the Group Strategy function. This function
exists to facilitate and inform the Executive Board’s assessment of
the risk landscape and development of potential strategies by which
it can drive long-term shareholder value. On an annual basis the
Group Strategy function develops an in-depth fact base in a consistent format which outlines the market attractiveness, competitive
position and financial performance by division and source market.
These are then used to facilitate debate as to the level and type of
risk that the Executive Board finds appropriate in the pursuit of its
strategic objectives. The strategy, once fully defined, considered and
approved by the Executive Board, is then incorporated into the Group’s
three-year roadmap and helps to communicate the risk appetite and
expectations of the organisation both internally and externally.
Ultimate responsibility for the Group’s risk management rests with
the Executive Board. Having determined and communicated the
appropriate level of risk for the business, the Executive Board has
established and maintains a risk management system to identify,
assess, manage and monitor risks which could threaten the existence of the company or have a significant impact on the achievement
of its strategic objectives: these are referred to as the principal risks
of the Group.
This risk management system includes an internally-published risk
management policy which helps to reinforce the tone set from the
top on risk, by instilling an appropriate risk culture in the organisation
whereby employees are expected to be risk aware, control minded
and “do the right thing”. The policy provides a formal structure for
risk management to embed it in the fabric of the business. Each
principal risk has assigned to it a member of the Executive Committee
as overall risk sponsor to ensure that there is clarity of responsibility
and to ensure that each of the principal risks are understood fully
and managed effectively.
The Executive Board regularly reports to the Audit Committee of
the Supervisory Board on the overall risk position of the Group, on
the individual principal risks and their management, and on the
performance and effectiveness of the risk management system as
a whole.
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MANAGEMENT REPORT
Risk Report
RISK MANAGEMENT SYSTEM
EXECUTIVE BOARD
Direct & Assure
• O
verall responsibility for risk management
• Determine strategic approach to risk
• Approve risk policy including risk appetite
and set tone at the top
• Agree how principal risks are managed,
mitigated & monitored
• Review the effectiveness of the risk
management system
R I S K OV E R S I G H T CO M M I T T E E ( RO C )
Review & Communicate
• F ormulate risk strategy and policy
• Discuss & propose risk appetite
• Summarise principal risks
• E
nsure effective monitoring
• Embed risk within business planning
GROUP RISK TEAM
Support & Report
Identify & Assess
B US I N ES S ES
& FUN C TI O N S
BUSINESSES
& FUNC TIONS
•
•
•
•
nderstand key risks
U
Review key risks & mitigation
Manage & monitor risks
Report on risk status
R I S K C H A M P I O N CO M M U N I T Y
B U SI NE SSE S
& FU NC T I O NS
B U SI NE SSE S
& FU NC T I O N S
Risk Report
The Risk Oversight Committee (“ ROC ”) ensures on behalf of the
Executive Board that business risks are identified, assessed, managed
and monitored across the businesses and functions of the Group.
Meeting on at least a quarterly basis, the ROC ’s responsibilities include considering the principal risks to the Group’s strategy and the
risk appetite for each of those risks, assessing the operational effectiveness of the controls in place to manage those risks and any action
plans to further improve controls, and reviewing the bottom-up risk
reporting from the businesses themselves to assess whether there
are any heightened areas of concern. The ROC helps to ensure that
risk management is embedded into the planning cycle of the Group
and has oversight of the stress-testing of cash flow forecasts.
Senior executives from the Group’s major businesses are required
to attend the ROC on a rotational basis and present on the risk and
control framework in their business, so that the members of the
ROC can ask questions on the processes in place, the risks present
in each business and any new or evolving risks which may be on their
horizon, and also to seek confirmation that the appropriate risk culture
continues to be in place in each of the major businesses.
Chaired by the Chief Financial Officer, other members of the Committee include the Group Director Controlling and Finance Director
Tourism, the directors of Compliance & Risk, Financial Accounting,
Treasury & Insurance, Group Reporting, Assurance & Strategy,
Investor Relations, Group Reward and representatives from the IT
and Legal Compliance functions. The director of Group Audit attends
without having voting rights to maintain the independence of their
function. The ROC reports quarterly to the Executive Board to ensure that it is kept abreast of changes in the risk landscape and
developments in the management of principal risks, and to facilitate
regular quality discussions on risks and risk management at the
Executive Board.
The Executive Board has also established a Group Risk team to ensure that the risk management system functions effectively and that
the risk management policy is implemented appropriately across the
Group. The Group Risk team supports the risk management process
by providing guidance, support and challenge to management whilst
acting as the central point for co-ordinating, monitoring and reporting
on risk across the Group. The Group Risk team is responsible for the
administration and operation of the risk and control software which
underpins the Group’s risk reporting and risk management process.
Each division and source market within the Group is required to
adopt the Group Risk Management policy. In order to do this, each
either has their own Risk Committee or includes risk as a regular
agenda item at their Board meetings to ensure that it receives the
appropriate senior management attention within their business. In
MANAGEMENT REPORT
99
addition, the divisions and source markets each appoint a Risk
Champion, who promotes the risk management policy within their
business and ensures its effective application. The Risk Champions
are necessarily in close contact with the Group Risk team and they are
critical both in ensuring that the risk management system functions
effectively and in implementing a culture of continuous improvement
in risk management and reporting.
RISK MANAGEMENT PROCE SS
The Group Risk team applies a consistent risk methodology across
all key areas of the business. This is underpinned by risk and control
software which reinforces clarity of language, visibility of risks, controls and actions and accountability of ownership. Although the process of risk identification, assessment and response is continuous
and embedded within the day-to-day operations of the divisions
and source markets, it is consolidated, reported and reviewed at
varying levels throughout the Group on at least a quarterly basis.
Risk identification: On a quarterly basis, line management closest
to the risks identify the risks relevant to the pursuit of the strategy
within their business area in the context of four types of risk:
• longer-term strategic and emerging threats;
• medium-term challenges associated with business change programmes;
• short-term risks triggered by changes in the external and regulatory
environment; and
• short-term risks in relation to internal operations and control.
A risk owner is assigned to each risk, who has the accountability and
authority for ensuring that the risk is appropriately managed.
Risk descriptions: The nature of the risk is articulated, stating the
underlying concern the risk gives arise to, identifying the possible
causal factors that may result in the risk materialising and outlining
the potential consequences should the risk crystallise. This allows
the divisions / source markets and the Group to assess the interaction
of risks and potential triggering events and / or aggregated impacts
before developing appropriate mitigation strategies to target causes
and / or consequences.
Risk assessment: The methodology used is to initially assess the
gross risk. The gross risk is essentially the worst case scenario, being
the product of the impact together with the likelihood of the risk
materialising if there were no controls in place to manage, mitigate
or monitor the risk. The key benefit of assessing the gross risk is
that it highlights the potential risk exposure if controls were to fail
completely or not be in place at all. Both impact and likelihood are
scored on a rating of 1 to 5 using the criteria outlined below.
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MANAGEMENT REPORT
Risk Report
This measures the impact and likelihood of the risk with the current
controls identified in operation. The key benefit of assessing the
current risk score is that it provides an understanding of the current
level of risk faced today and the reliance placed on the controls
currently in operation.
The next step in the process is to assess the controls which are
currently in place and which help to reduce the likelihood of the risk
materialising and / or its impact if it does. The details of the controls
including the control owners are documented. Consideration of the
controls in place then enables the current or net risk score to be
assessed, which is essentially the reasonably foreseeable scenario.
IMPAC T A S SE S SME N T
INSIGNIFICANT
MINOR
M O D E R AT E
MAJOR
C ATA ST R O P H I C
Q U A N T I TAT I V E
< 3 % EBITA *
(< € 30 m)
3 – < 5 % EBITA *
( 30 – < € 50 m)
5 – < 10 % EBITA *
(50 – < € 100 m)
10 – < 15 % EBITA *
(100 – < € 150 m)
≥ 15 % EBITA *
( ≥ € 150 m)
Q U A L I TAT I V
Minimal impact on
Limited impact on
Short term impact on
Medium term impact on
Detrimental impact on
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Global reputation
Programme delivery
Technology reliability
Health & Safety
standards
Global reputation
Programme delivery
Health & Safety
standards
Global reputation
Programme delivery
Health & Safety
standards
Global reputation
Programme delivery
Health & Safety
standards
Global reputation
Programme delivery
Health & Safety
standards
* Budgeted underlying EBITA for the financial year ended 30 September 2015
LIKELIHOOD ASSESSMENT
RARE
U N L I K E LY
POSSIBLE
L I K E LY
A L M O ST C E R TA I N
< 10 % Chance
10 – <30 % Chance
30 – < 60 % Chance
60 – < 80 % Chance
≥ 80 % Chance
Risk Response: If management are comfortable with the current
risk score, then the risk is accepted and therefore no further action is
required. The controls in place continue to be operated and management monitor the risk, the controls and the risk landscape to ensure
that the risk score stays stable and in line with management’s tolerance of the risk.
If, however, management assesses that the current risk score is too
high, then an action plan will be drawn up with the objective of introducing new or stronger controls which will reduce the impact and / or
likelihood of the risk to an acceptable, tolerable and justifiable level.
This is known as the target risk score and is the parameter by which
management can ensure the risk is being managed in line with the
Group’s overall risk appetite. The risk owner will normally be the
individual tasked with ensuring that this action plan is implemented
within an agreed timetable.
Each division / source market will continue to review their risk register
on an ongoing basis through the mechanism appropriate for their
business e. g. local Risk Committee. The risk owner will be held to
account if action plans are not implemented within the agreed delivery
timescales.
This bottom-up risk reporting is considered by the ROC alongside
the Group’s principal risks. New risks are added to the Group’s
principal risk register if deemed to be of a significant nature so that
the ongoing status and the progression of key action plans can be
managed in line with the Group’s targets and expectations.
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101
AD HOC RISK REPORTING
EFFEC TIVENE SS OF RISK MANAGEMENT SYSTEM
Whilst there is a formal process in place aligned to reporting on risks
and risk management on a quarterly basis, the process of risk identification, assessment and response is continuous and therefore if
required risks can be reported to the Executive Board outside of the
quarterly process if events dictate that this is necessary and appropriate. Ideally such ad hoc reporting is performed by the business or
function which is closest to the risk, but it can be performed by the
Group Risk team if necessary. Examples of ad hoc risk reporting in
the financial year 2014 / 15 were the assessment of the risks posed
by the potential exit of Greece from the EU (so-called “Grexit” risk)
and reporting of the impact and action plans required in the aftermath of the tragic events in Tunisia which occurred at the end of
June 2015.
The Executive Board regularly reports to the Audit Committee of
the Supervisory Board on the performance and effectiveness of the
risk management system, supported by the ROC and the Group Risk
team. Additionally, the Audit Committee receives assurance from
Internal Audit through its programme of audits over a selection of
principal risks and business transformation initiatives most critical
to the Group’s continued success. Finally, the Group’s auditors assess
the risk management system in accordance with section 317 (4) of
the German Commercial Code.
R I S K M AT U R I T Y & C U LT U R E
During the financial year 2014 / 15, the Risk Champions and the
Group Risk team have worked together to formally assess the risk
maturity and culture of their business primarily through the Risk
Champions completing self-assessment questionnaires, validating
this with their local boards and then discussing their responses with
the Group Risk team. The Group Risk team have then used these
assessments to rate the risk maturity of each business and have
included this assessment on the risk reporting dashboard which
forms part of the quarterly bottom-up risk reporting pack. This assessment process has proven to be an extremely useful exercise
which has led to the development of risk management actions plans
for the businesses as part of the culture of continuous improvement.
Furthermore we have just conducted our first Group-wide employee
survey since the merger completed and the feedback received from
our employees will form the basis for forging a unified culture for
the Group. It is a key yardstick for us, indicating where we stand as
a Company, what our strengths are and what weaknesses we will
need to address.
ENTIT Y SCOPING
A robust exercise is conducted each year to determine the specific
entities in the Group which need to be included within the risk and
control software and therefore be subject to the full rigour of the risk
management process. The scoping exercise starts with the entities
included within the Group’s consolidation system, and applies materi
ality thresholds to a combination of revenue, profit and asset benchmarks. From the entities this identifies, the common business
management level at which those entities are managed is identified
to dictate the entities which need to be set in the risk and control
software itself to facilitate completeness of bottom-up risk reporting
across the Group. This ensures that the risks and controls are able
to be captured appropriately at the level at which the risks are being
managed.
The conclusion from all of the above assurance work is that the risk
management system has functioned effectively throughout the year
and there have been no significant failings or weaknesses identified.
Of course there is always room for improvement and as noted earlier,
in assessing risk maturity at each of our major businesses we have
developed risk management actions plans which the Risk Champions,
on behalf of local management, will focus on in their respective businesses during the financial year 2015 / 16. Broadly this concerns ensuring consistency of approach in assessing risk scores, clearer identification of controls currently in place as well as any action plans to
introduce further controls, and ensuring that risk identification has
considered the four risk categories. There will be an upgrade to the
risk and control software during the financial year 2015 / 16 which
will help to facilitate and monitor these action plans.
Principal risks
There are some principal risks which are inherent to the tourism
sector and necessarily face all businesses in the sector. Internally we
refer to these as our “Monitored” risks – we have controls, processes
and procedures in place as a matter of course which serve to mitigate
each risk to either minimise the likelihood of the event occurring
and / or minimise the impact if it does occur. These risks are on our
risk radar and we regularly monitor the risk, the controls and the risk
landscape to ensure that the risk score stays stable and in line with
our risk appetite in each case.
Furthermore, the tourism industry is fast-paced and competitive,
with the emergence of new market participants operating new business models, combined with consumer tastes and preferences evolving
all the time. As a result as a business we always have to adapt to the
changing environment, and it is this process of constant change
which generally gives rise to a number of principal risks which we
have to actively manage in order to bring the risk into line with our
overall risk appetite.
With the merger completing in December 2014, this has led to a refinement of the overall Group strategy and the associated principal risks
102
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in the strategic and business change risk categories as a result. We
have action plans in place to increase controls around each of these
risks and reduce the current net risk score to the target level indicated
in the heat map overleaf.
In the heat map the assessment criteria used are shown on page
100. Note that the quantitative impact assessment is based on the
budgeted underlying EBITA for the financial year ended 30 September 2015.
If the risk detail in the subsequent tables does not suggest otherwise,
the risks shown below relate to all segments of the Group. The risks
listed are the principal risks to which we are exposed and are not
exhaustive. They will necessarily evolve over time due to the dynamic
nature of our business. Note that because of the new format of the
presentation of our risks in this the first year of the newly merged
Group, the risks as presented are not directly comparable in detail
with the risks listed in the risk report 2014.
RISK POSITION
I NHE R E NT R I SKS
gh re
Hi Sco
sk
Ri
1
2
1
4
I MPAC T
7
6
3
5
7
8
2
3
4
5
6
C U R R E NT R I SK PO SI T I O N
Macroeconomic Risks
Health & Safety
Seasonal Cash Flow Profile
Competition and Consumer Preferences
Destination disruption
Input Cost Volatility
Legal & Regulatory Compliance
Joint Venture Partnerships
Supply Chain Risk
A KT I VE R I SKS
8
w re
Lo Sco
sk
Ri
C U R R E NT R I SK PO SI T I O N
1
2
LIKELIHOOD
3
4
C UR REN T RI S K PO S ITION
TARGET RISK POSITIO N
5
This shows the current level of risk faced
today after taking in to account the
controls that are in place and which are
operating as intended.
This shows the target level of risk deemed to be
an acceptable, tolerable and justifiable risk position after further actions have been implemented
to mitigate the risk.
6
7
8
IT Development & Strategy
Brand Change
Growth Options
Integration Oportunities
Sustainability Targets
Cyber Security
Talent Management
Corporate Streamlining
TA RG E T R I SK POS I T I ON
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Principal risks – Inherent to the sector
RISK NAME
D E S T I N AT I O N
D I S R U P T I O N
N AT U R E O F R I S K
M I T I G AT I N G FA C T O R S
Providers of holiday and travel services are exposed to
the inherent risk of incidents affecting some countries or
destinations within their operations. This can include
natural catastrophes such as hurricanes or tsunamis; outbreaks of disease such as Ebola; political volatility as has
been seen in Egypt and Greece in recent years; the implications of war in countries close to our source markets
and destinations; and terrorist events such as the tragic
incident in Tunisia this year.
• Whilst we are unable to prevent such events from occurring, we have well defined crisis management procedures
and emergency response plans which are implemented
when an event of this nature occurs, with the focus
being on the welfare of our customers.
• Where the appropriate course of action is to bring customers home immediately, our significant fleet of aircraft allows us to do this smoothly and efficiently.
• Our policy is to follow foreign office advice in each of
our source markets with regards to non-essential travel.
This serves to minimise the exposure of our customers
to turbulent regions.
• Due to our presence in all key holiday regions, when a
specific destination has been impacted by an external
event, we are able to offer alternative destinations to our
customers and to remix our destination portfolio away
from the affected area in future seasons if necessary.
• We always assume some level of destination disruption
each year when setting financial plans and targets, so
that we are able to cope with a “normal” level of disruption without it jeopardising achievement of our targets.
There is the risk that if such an event occurs which impacts on one or more of our destinations that we could
potentially suffer significant operational disruption and
costs in our businesses. We may possibly be required to
repatriate our customers and / or the event could lead to
a significant decline in demand for holidays to the affected
destinations over an extended period of time.
M AC RO E CO N O M I C
RISKS
Spending on travel and tourism is discretionary and price
sensitive. The economic outlook remains uncertain with
different source markets at different points in the economic
cycle. Consumers are also waiting longer to book their trips
in order to assess their financial situation.
There is the risk that fluctuations in macroeconomic conditions in our source markets will impact on the spending
power of our customers which could impact on our shortterm growth rates and lead to margin erosion.
• Many consumers prioritise their spending on holidays
above other discretionary items.
• Creating unique and differentiated holiday products
which match the needs of our customers.
• Leveraging our scale to keep costs down and prices
competitive.
• Having a range of source markets so that we are not
over exposed to one particular economic cycle.
• Promoting the benefits of travelling with a recognised
and leading tour operator to increase consumer confidence and peace of mind.
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RISK NAME
CO M P E T I T I O N &
CO N S U M E R
P R E F E R E N C E S
Risk Report
The tourism industry is fast-paced and competitive with
the emergence of new market participants operating new
business models, combined with consumer tastes and
preferences evolving all the time.
• Our outstanding market position as a leading tourism
group, the strength of our brands and our vertically integrated business model enables us to respond robustly
to competitive threats.
• The TUI Group is characterised by the continuous development of unique and exclusive holidays, developing
new concepts and services which match the needs and
preferences of our customers.
• Our vertically integrated business model offers end-toend customer services, from consultation and booking
of holidays via flights with the Group’s own airlines
through to Group-owned or operated hotels, resorts
and cruise ships. Vertical integration thus facilitates
the development and marketing of individual, tailored
holiday offerings for customers which it is difficult for
competitors to replicate.
• Building strong and lasting relationships with our key
hotel partners, which further reinforces our ability to
develop new concepts exclusive to the TUI Group
which competitors struggle to match.
• Focusing on being online throughout the whole of the
customer journey – from inspiration, to booking, to the
holiday itself, as well as returning and sharing experiences through social media.
In recent years there has been an emergence of successful
substitute business models such as web-based travel and
hotel portals which allow end users to combine the individual elements of a holiday trip on their own and book
them separately.
Consumer tastes and preferences have evolved in recent
years as well, with more consumers booking their holidays
online and via mobiles and tablets, and booking closer to
the time of travel.
There is the risk that if we do not respond adequately to
such business model disruption or if our products and services fail to meet changing customer demands and preferences, that our turnover, market share and profitability
will suffer as a result.
I N P U T CO ST
V O L AT I L I T Y
A significant proportion of operating expenses are in non-
local currency and / or relate to aircraft fuel which therefore exposes the business to changes in both exchange
rates and fuel prices.
There is the risk that if we do not manage adequately the
volatility of exchange rates, fuel prices and other input
costs, then this could result in increased costs and lead to
margin erosion, impacting on our ability to achieve profit
targets.
There is also the risk that if our hedging policy is too rigid,
we may find ourselves unable to respond to competitive
pricing pressures during the season without it having a
direct detrimental impact on our market position and / or
profitability.
• Ensuring that the appropriate derivative financial instruments are used to provide hedging cover for the underlying transactions involving fuel and foreign currency.
• Maintaining an appropriate hedging policy to ensure
that this hedging cover is taken out ahead of source
market customer booking profiles. This provides a degree of certainty over input costs when planning pricing
and capacity, whilst also allowing some flexibility in
prices so as to be able to respond to competitive pressures if necessary.
• Tracking the foreign exchange and fuel markets to ensure the most up-to-date market intelligence and the
ongoing appropriateness of our hedging policies.
• Detailed information on currency and fuel hedges can
be found in the Notes to the consolidated financial
statements.
Risk Report
RISK NAME
SEASONAL
C A S H F L O W P R O F I L E
LEGAL &
C O M P L I A N C E
Tourism is an inherently seasonal business with the majority of profits earned in the European summer months.
Cash flows are similarly seasonal with the cash high occurring in the summer as advance payments and final balances
are received from customers, with the cash low occurring
in the winter as liabilities have to be settled with many
suppliers after the end of the summer season.
• As our business is spread across a number of source
markets within the Tourism division there are some
counter-cyclical features e. g. winter is a more important
season for the Nordic and Canadian source markets.
Similarly some of the businesses in the Specialist Travel
division e. g. Crystal, have a different seasonality profile
to temper the seasonality within Tourism.
• The business produces regularly both short term and
long term cash forecasts during the year which the
Treasury team use to manage cash resources effectively.
• Existing credit facilities are considered to be more than
sufficient for our requirements and provide ample
headroom.
• We continue to maintain high-quality relationships with
the Group’s key financiers and monitor compliance with
the covenants contained within our financing facilities.
Most providers of holiday and travel services operate
across a number of economies and jurisdictions which
therefore exposes them to a range of legal, tax and other
regulatory laws which must be complied with.
As the TUI Group is the world’s leading tourism business
operating from 31 source markets and providing holidays
in over 180 destinations, we are exposed to a range of laws
and regulations with which we must comply or else risk
incurring fines or other sanctions from regulatory bodies.
H E A LT H & S A F E T Y
105
There is the risk that if we do not adequately manage cash
balances through the winter low period this could impact
on the Group’s liquidity and ability to settle liabilities as
they fall due whilst ensuring that financial covenants are
maintained.
R E G U L ATO R Y
MANAGEMENT REPORT
For all providers of holiday and travel services, ensuring
the health and safety of customers is of paramount importance. This is especially so for TUI as we are the
world’s leading tourism business selling holidays to over
20 million customers per annum.
There is the risk of accidents occurring causing injury or
death to customers or colleagues whilst on a TUI holiday.
This could result in reputational damage to the business
and / or financial liabilities through legal action being taken
by the affected parties.
• Communication and strong tone from the top concerning
compliance with laws and regulations.
• Embedded legal and tax expertise in all major businesses
responsible for maintaining high quality relationships
with the relevant regulators and authorities.
• Ongoing review conducted by the Group Legal Compliance team to centrally monitor compliance with
regulations and provide expert advice to local teams
on specific areas.
• Health and safety functions are established in all businesses in order to ensure there is appropriate focus on
health and safety processes as part of the normal
course of business.
• Ongoing monitoring is conducted by the Group Health
& Safety compliance function to ensure compliance
with minimum standards.
• Appropriate insurance policies are in place for when
incidents do occur.
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RISK NAME
S U P P LY C H A I N R I S K
Risk Report
Providers of holiday and travel services are exposed to the
inherent risk of failure in their key suppliers, particularly
hotels. This is further heightened by the industry convention of paying in advance (“prepayment”) to secure a level
of room allocation for the season.
• Owned and joint venture partner hotels form a substantial part of our programme which reduces our inherent
risk in this area.
• Established and embedded a robust prepayment authorisation process to both limit the level of prepayments made and ensure that they are only paid to
trusted, credit-worthy counterparties.
• Where prepayments are made to external hoteliers this
is to secure access to unique and differentiated product
for which demand is inherently higher and more resilient
to external events than for commodity product.
• Prepayments are monitored on a timely and sufficiently
granular basis to manage our financial exposure to
justifiable levels.
There is the risk that we do not adequately manage our
financial exposure should demand drop either for individual
hotels and / or for the destination in which the hotels are
located and to which the tour operator still has a level of
prepayment outstanding which could result in financial
losses.
JOINT VENTURE
PA R T N E R S H I P S
It is common for tourism groups to use joint venture partnerships in some of their operations in order to reduce
the risk of new ventures or to gain access to additional
expertise. TUI has four significant joint ventures – Riu;
TUI Cruises; Sunwing; TUI Russia & Ukraine.
There is the risk that if we do not maintain good relations
with our key partners that the ventures’ objectives may
not remain consistent with that of the Group which could
lead to operational difficulties and jeopardise the achievement of financial targets.
• Good working relationships exist with all of our main
joint venture partners and they are fully aligned with
and committed to the growth strategy of TUI Group.
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MANAGEMENT REPORT
107
Actively managed principal risks – Strategic & emerging and business change
RISK NAME
I T D E V E LO P M E N T &
S T R AT E G Y
Our focus is on enhancing customer experience by providing engaging, intuitive and seamless customer service
through delivery of leading digital solutions, core platform
capabilities, underlying technical infrastructure and IT
services required to support the Group’s overall strategy
for driving profitable top-line growth.
• Developed and communicated (in conjunction with Executives, Business & IT Leadership Teams) the Group’s
IT Strategy which is clearly aligned to our overall business objectives and considers external factors such as
the pace of technology change and internal factors
such as the underlying quality required throughout IT.
• Continuing to implement our online platform in order
to enhance customer experience and drive higher conversion rates.
• Implementing a SAP -based central customer platform
to collate all information on our customers across their
journey to provide a single view of the customer alongside an eCRM platform which will support strategic
marketing.
• Defined and implemented a programme and project
management framework and software delivery lifecycle
management methodologies, including associated training and coaching.
• Cascaded clear technology standards and associated
delivery roadmaps which are linked to Group wide and
source market objectives.
There is a risk that we fail to keep up with or outpace the
market and evolving consumer preferences, we do not
concentrate our activities on the correct areas for overall
business success, do not address legacy inefficiencies and
complexities of our existing infrastructure and / or do not
execute our strategy and developments in line with expectations.
If we are ineffective in our strategy or technology development this could impact on our ability to provide leading
technology solutions in our markets thereby impacting on
our competitiveness, our ability to provide a superior customer experience and associated impact on quality and
operational efficiency. This would ultimately impact on
our customer numbers, revenue and profitability.
BRAND CHANGE
Our long term strategy is to migrate our many local brands
in to one global brand, with the aim of strengthening
and enhancing our competitive positon, particularly in the
online world. We are aiming to capitalise on the strength
of the TUI brand on a global scale whilst ensuring we
maintain local roots.
There is an inherent risk when executing such a large
scale global brand strategy that we may not be able to
maintain the benefits of local brand equity throughout the
process and we recognise that such a large programme
should take place with respect for the interests of all our
stakeholders and existing contractual obligations.
If we do not successfully deliver against our strategy this
could result in a decline in brand awareness and loyalty
with associated decline in customer demand or it could
impact on our ability to maximise on the opportunities
facilitated by having oneBrand on a global scale.
• Undertaken detailed market research in each source
market to assess current brand positioning and likely
impact of the brand change.
• Approved incremental marketing spend to raise the
profile of the TUI brand locally in order to promote the
benefits and to manage the expectations of our customers in relation to the future of our enhanced products
and services.
• Established a ‘oneBrand’ programme team responsible
for coordinating and monitoring the brand change
activity across all source markets, with KPI s identified
and tracked on a regular basis by both local and group
colleagues and prompt corrective action taken to address issues as they arise.
• Taking a phased and focussed approach to the brand
change by implementing in one source market at a
time. This minimises the risk at a given point in time
and allows us to gain learnings from the source markets
undergoing transition and implement those learnings
in the next source market.
• Communicating both internally & externally across
multiple media channels to drive brand awareness, with
further plans to increase awareness through consistent
marketing in key destination airports and changing of
the livery on our aircraft in order to support greater
awareness of the TUI Brand.
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MANAGEMENT REPORT
RISK NAME
GROWTH OPTIONS
Risk Report
We have set ourselves a target of achieving underlying
• The Executive Board is very focussed on the strategy
and mindful of the risks, so there is strong direction
and commitment from the top.
• The Group Tourism Board plays an important role in
co-ordinating, executing and monitoring the various
growth initiatives.
• There are a number of initiatives underway to achieve
growth which reduces the risk through diversification.
• Each of the business teams tasked with achieving an
element of the growth strategy are still required to
maintain sound financial discipline. The Group’s investment criteria and authorisation processes must still be
adhered to as we are not prepared to be reckless in the
pursuit of growth.
• We continue to maintain strong relationships with the
providers of aircraft finance.
• Monitoring of overall market conditions continues to
occur so that plans can be adapted or contingency
plans invoked if required.
EBITA C AGR of at least 10 % over the next three financial
years. The achievement of this target is likely to require
us to achieve growth in revenues of c. 3 % pa. Our focus is
on achieving growth in accommodation by:
• opening new hotels (target set of c. 60 new hotels by
2018 / 19);
• growing our powerful and exclusive international hotel
concepts;
• continuing to expand the Cruise fleet.
Additionally we are looking to broaden our offering to
customers by introducing extra flexibility into our packages,
and to expand our long-haul offering by taking advantage
of the capabilities of the 787s which we have and are due to
receive via our order book. Note that availability of aircraft
finance is a key assumption of our business model.
Whilst managing this expansion, we must continue to
adapt to changes in consumer tastes and booking profiles,
and we must continue to match our capacity to consumer
demand.
There is a risk that we could be unsuccessful in maximising
opportunities to execute our expansion strategy. This
could mean that we fail to achieve some of the initiatives
we have embarked upon, which could result in us falling
short against the overall growth targets we have set for
the business.
Risk Report
RISK NAME
I N T E G R AT I O N
O P P O R T U N I T I E S
MANAGEMENT REPORT
109
Our key rationale for the merger of TUI AG and
TUI Travel PLC is growth and delivery of significant synergies and to act ‘as one’ wherever it makes sense to do
so, maintaining local differences where the benefit of that
differentiation is greater than that of harmonisation.
• Strong project management structures exist for all of the
major restructuring programmes which are underway
to ensure that they are managed effectively.
• Roll-out of project reporting tool is underway to ensure
enhanced visibility of the progress of major projects as
a matter of routine.
• Regular reporting by the major projects to the Executive
Board to ensure swift resolution of any issues or to enhance co-ordination across the Group where required.
There are a number of restructuring projects underway
across the Group as a result to enable us to achieve these
opportunities. There is an inherent risk with any large restructuring programme that we face challenges in managing
the complexities associated with further integrating our
business, reducing overlapping activities in order to develop
a more lean and streamlined operating model.
If we are not successful in leveraging and optimising the
identified opportunities this could have a significant impact on our ability to deliver the identified benefits in line
with expectations and enhance shareholder value.
S U S TA I N A B I L I T Y
TA R G E T S
Our focus is to reduce the environmental impact of our
holidays, creating positive change for people and communities and pioneer sustainable tourism across the world.
There is a risk that we are not successful in driving forecast
environmental improvements across our operations, that
our suppliers do not uphold our sustainability standards
and we fail to influence destinations to manage tourism
more sustainably.
If we do not maximise our positive impact on destinations
and minimise the negative impact on the environment to
the extent that our stakeholders expect, this could result
in a decline in stakeholder confidence, reduction in demand
for our products and services and loss of competitive
advantage.
• Developed and launched the ‘Better Holidays, Better
World’ 2020 sustainability strategy framework.
• Established a dedicated sustainability team to work
closely with the business and other stakeholders to
implement the sustainability strategy.
• Operating the most carbon efficient airlines in Europe
with continued investment in new, more efficient aircraft
(e. g. Boeing 787 Dreamliner) and cruise ships (e. g.
Mein Schiff 3 & 4).
• Implemented an environmental management system
with five of our airlines having achieved ISO 14001 certification.
• Increased measures to influence accommodation suppliers to achieve third party sustainability certification
recognised by the Global Sustainable Tourism Council
(GSTC ).
• Continuing to invest in projects to drive innovation
such as the ecoDemonstrator partnership with Boeing
and ground-breaking total impact measurement study
in collaboration with PwC and the Travel Foundation to
inform future strategy.
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MANAGEMENT REPORT
RISK NAME
CYBER SECURITY
Risk Report
Our responsibility is to protect the confidentiality, integrity
and availability of the data we have and the services we
provide to our customers, our employees, our suppliers
and service delivery teams.
• Renewed commitment from the Executive Board in
support of key initiatives to ensure all existing and
future IT systems are secure by design, that exposure
to vulnerability is managed effectively and that user
access is sufficiently controlled.
• Continuous review and testing of all external devices
and ongoing monitoring of logs in order to identify any
potential threats as and when they arise.
There is a risk that our increasing dependence on online
sales and customer care channels (web / mobile) increases
our exposure and susceptibility to cyber-attacks and hacks.
If we do not ensure we have the appropriate level of security controls in place across the Group, this could have a
significant negative impact on our key stakeholders, associated reputational damage and potential for financial implications.
TA L E N T
M A N A G E M E N T
Our success depends on the ability to attract and retain
key talent and it relies on having good relations with
colleagues.
There is a risk that we are unable to attract and retain key
talent, build future leadership capability and maintain the
commitment and trust of our employees. This risk is enhanced in periods of uncertainty and in areas of the business impacted by the merger and the restructuring programmes which are underway as a result.
If we face challenges in managing and maintaining our
talent pipeline in order to deliver against our strategy, drive
competiveness and maximise on our operating performance, this could impact on our ability to future proof the
Group and the associated potential for negative impact
on shareholder confidence.
• Continuing to extend and embed our established talent
management framework across the Group in order to
engage and empower people whilst delivering results
and managing performance.
• Assessing our current organisational competence and
capability against that required to maximise current
and future shareholder value.
• Ensuring succession plans are in place for all identified
business critical roles, in particular emergency successors for all senior management roles, and that these
plans are reviewed every six months.
• Developed a structured and standard approach to be applied where necessary to key individuals during periods
of uncertainty and / or organisational change in order
to retain top talent in business critical roles.
• Implemented a process to identify and deliver programmes targeted at high potential talent in order to
drive competiveness and maximise operating performance.
• Building our pipeline of leadership talent through our
International Graduate Leadership Programme which
attracts, develops and retains high quality graduates
to become our future senior Commercial Leaders.
• Driving high performance and engagement through our
performance review, development plans and career
planning process.
Risk Report
RISK NAME
C O R P O R AT E
STREAMLINING
MANAGEMENT REPORT
111
The merger of TUI AG and TUI Travel PLC has presented
us with the opportunity to reduce Corporate overheads
by eliminating duplicate costs.
• Close monitoring of the delivery of corporate streamlining cost savings to ensure they are achieved in line
with expectations.
• To date 20 % of the target savings have been achieved
in the financial year 2014 / 15.
If we do not deliver the targeted savings of € 50 m this
may impact on our ability to achieve our overall underlying
EBITA growth target.
R I S K S W I T H N O I M PA C T O N U N D E R LY I N G E B I TA
Impairment risk related to the investment in container shipping
(Hapag-Lloyd AG ). TUI Group continues to hold a substantial investment in the container shipping company, Hapag-Lloyd AG . Significant deterioration in the market value of the investment will require
an impairment to be booked in the income statement of the TUI
Group – as has occurred in the financial year ended 30 September 2015. Whilst this risk has been reduced by the impairment already
taken, the value of the investment on our balance sheet is still material and therefore the risk continues to exist. We are committed to
our plan to fully exit this investment in the medium term.
German trade tax risk. As noted in prior years, the German tax
authorities have issued guidance on how certain items of expend
iture should be treated for the purposes of German trade tax. The
Group continues to disagree with the German tax authorities’
interpretation of this matter and it is possible that the issue will
have to be litigated through the German tax courts which could
take a considerable amount of time to bring it to a resolution. It is
difficult to estimate accurately the potential liability should the
German tax authorities challenge successfully the Group’s interpretation of the guidance due to the differing nature of the contracts which could be impacted by any such challenge. As a result
there is a range of possible outcomes, however it is possible that a
material liability might arise for the overall period since 2008.
Further details can be found in the Contingent liabilities note to
the consolidated financial statements.
talent is always a risk which is heightened in the immediate aftermath of a major corporate transaction.
Destination disruption is an inherent risk to which all providers of
holiday and travel services are exposed. This disruption can take
place in many forms such as natural catastrophes, outbreaks of diseases, social unrest, terrorist attacks and the implications of war in
countries close to our source markets and destinations. Sadly, this
financial year saw the crystallisation of one such risk with the tragic
events in Tunisia at the end of June. Whilst in general the destination disruption risk is constant on a year-to-year basis, with the
Tunisia incident and the recent suspension of flights from the UK to
Sharm el-Sheikh in Egypt, it is apparent that the risk of disruption in
some North African destinations has increased. Our policy in this
regard remains to follow foreign office advice in each of our source
markets relating to non-essential travel to specific destinations.
Cyber crime is an emerging threat which is present in all modern
economies and across virtually all industry sectors due to the increased use of the internet as a business channel and method of
communication. We have recognised this by including cyber security
on our principal risk register this year.
Finally, the risk of a deterioration in the valuation of our container
shipping investment crystallised during the year and an impairment
has been taken. Whilst this has therefore reduced the risk for future
periods, the value of the investment on our balance sheet is still
material and therefore the risk continues to exist.
OVER ALL RISK A SSE SSMENT
The completion in December 2014 of the merger between TUI AG
and TUI Travel PLC has had an impact on our risk landscape by
opening up new business opportunities but also introducing new
risks in the pursuit of those opportunities (e. g. brand change) and in
the context of the delivery of specific merger synergies and we are
pleased that the post-merger integration of the Group is progressing
well and with a faster pace than originally anticipated. We are confident
in the delivery of our specific merger synergy targets and integration-
related restructuring programmes and in our ability to successfully
attract, retain and manage our key talent as the management of
Other than the items noted above, the Executive Board is of the
opinion that there has been no other significant change to the risk
landscape of the Group.
V I A B I L I T Y S TAT E M E N T
In accordance with provision C2.2 of the 2014 revision of the UK
Corporate Governance Code, the Executive Board has assessed the
prospect of the Company over a longer period than the twelve
months required by the ‘Going Concern’ provision. The Executive
Board considers annually and on a rolling-basis a three year plan for
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MANAGEMENT REPORT
Risk Report
the business as outlined earlier in the “Strategic direction and risk
appetite” section. The latest three year plan was approved in October 2015 and covers the period to 30th September 2018. A three year
horizon is considered appropriate for a fast-moving competitive environment such as tourism, and it is noted that the latest three year
plan goes beyond the June 2018 date when the Group’s current
€ 1,535.0 m revolving credit facility matures, which is used to manage
the seasonality of the Group’s cash flows and liquidity.
The three year plan considers cash flows as well as the financial
covenants which the credit facility requires compliance with. Key
assumptions underpinning the three year plan and the associated
cash flow forecast are that the credit markets will be sufficiently
fluid to enable the revolving credit facility to be renewed at the same
level, and that aircraft finance will continue to be readily available.
The Executive Board has conducted a robust assessment of the
principal risks facing the company, including those that would threaten
its business model, future performance, solvency or liquidity. Sensitivity analysis is applied to the cash flow to model the potential effects
should principal risks actually occur, individually or in unison. This includes modelling the effects on the cash flow of significant disruption
to a major destination in the summer season.
Taking account of the company’s current position, principal risks and
the aforementioned sensitivity analysis, the Executive Board has a
reasonable expectation that the company will be able to continue in
operation and meet its liabilities as they fall due over the three year
period of the assessment.
Key features of the internal control and risk
management system in relation to the Group
accounting process (sections 289 (5) and 315 (2)
no 5 of the German Commercial Code HGB )
1 . D E F I N I T I O N A N D E L E M E N T S O F T H E I N T E R N A L C O N T R O L
AND RISK MANAGEMENT SYSTEM IN THE TUI GROUP
The TUI Group’s internal control system comprises all the principles,
processes and measures that are applied to secure effective, efficient
and accurate accounting which is compliant with the necessary legal
requirements.
trusted responsibility for the internal control system in the TUI Group
to specific Group functions.
The elements of the internal monitoring system in the TUI Group
comprise both measures integrated into processes and measures
performed independently. Besides manual process controls, e. g. the
“four-eyes principle”, another key element of the process-related
measures are automated IT process controls. Process-related monitoring is also secured by bodies such as the Risk Oversight Committee
of TUI AG and by specific Group functions.
The Supervisory Board of TUI AG , in particular its Audit Committee,
as well as the Group Auditing department at TUI AG and the decentralised audit departments within Group companies, are incorporated
into the TUI Group’s internal monitoring system through their audit
activities performed independently from business processes. On the
basis of section 107 (3) of the German Stock Corporation Act, the
Audit Committee of TUI AG deals primarily with the auditing of the
annual financial statements, monitoring the accounting process and
the effectiveness of the internal control and risk management system.
The Group’s auditors have oversight of the TUI Group’s control environment through their non-process-related activities. The audit of
the consolidated financial statements by the Group auditor and the
audit of the individual financial statements of Group companies
included in the consolidated financial statements, in particular, constitute a key non-process-related monitoring measure with regard
to Group accounting.
In relation to Group accounting, the risk management system, introduced as an Enterprise Risk Management System (ERM System) as
a component of the internal control system, also addresses the risk
of misstatements in Group bookkeeping and external reporting.
Apart from operational risk management, which includes the transfer
of risks to insurance companies by creating cover for damage and
liability risks and also hedging transactions to limit foreign currency
and fuel price risks, the TUI Group’s risk management system embraces the systematic early detection, management and monitoring
of risks across the Group. A more detailed explanation of the risk
management system is provided in the section on the Risk Governance
Framework in the Risk Report.
2.
In the completed financial year, the TUI Group’s existing internal
control system was further developed, drawing on the internationally
recognised framework of COSO (Committee of Sponsoring Organizations of the Treadway Commission), which forms the conceptual
basis for the internal control system.
The TUI Group’s internal control system consists of internal controls
and the internal monitoring system. The Executive Board of TUI AG ,
in exercising its function of managing business operations, has en-
USE OF IT SYSTEMS
Bookkeeping transactions are captured in the individual financial
statements of the subsidiaries of TUI AG , through local accounting
systems such as SAP or Oracle. As part of the process of preparing
their individual financial statements, subsidiaries complete standardised reporting packages in the Group’s Oracle Hyperion Financial
Management 11.1.2.3 (HFM ) reporting system. HFM is used as the
uniform reporting and consolidation system throughout the Group so
that no additional interfaces exist for the preparation of the consolidated financial statements.
Risk Report
All consolidation processes used to prepare the consolidated financial
statements of TUI AG , e. g. capital consolidation, assets and liabilities
consolidation and expenses and income elimination including at equity
measurement, are generated and fully documented in HFM . All elements of TUI AG ’s consolidated financial statements, including the
disclosures in the Notes, are developed from the HFM consolidation
system. HFM also provides various modules for evaluation purposes
in order to prepare complementary information to explain TUI AG ’s
consolidated financial statements.
The HFM reporting and consolidation system has an in-built workflow process whereby when businesses promote their data within
the system, to signal that their reporting package is complete, they
are then locked out from making any further changes to that data.
This ensures data integrity within the system and also facilitates a
strong audit trail enabling changes to a reporting package to be
identified. This feature of the HFM system has been checked and
validated by the TUI AG Group Audit department on several occasions since the system was introduced.
At their own discretion, TUI AG ’s Group auditors select certain individual financial statements from the financial statements entered
in the HFM reporting and consolidation system by the Group companies, which are then reviewed for the purposes of auditing the
3.
S P E C I F I C R I S K S R E L AT E D T O G R O U P A C C O U N T I N G
Specific risks related to Group accounting may arise, for example,
from unusual or complex business transactions, in particular at critical
times towards the end of the financial year. Business transactions not
routinely processed also entail special risks. The discretion necessarily
granted to employees for the recognition and measurement of assets
and liabilities may result in further Group accounting-related risks.
The outsourcing and transfer of accounting-specific tasks to service
companies may also give rise to specific risks. Accounting-related
risks from derivative financial instruments are outlined in the Notes
to the consolidated financial statements.
4 . K E Y R E G U L AT I O N A N D C O N T R O L A C T I V I T I E S T O E N S U R E
PROPER AND RELIABLE GROUP ACCOUNTING
The internal control measures aimed at securing proper and reliable
Group accounting ensure that business transactions are fully recorded
in a timely manner in accordance with legal requirements and the
Articles of Association. This also ensures that assets and liabilities
are properly recognised, measured and presented in the consolidated
financial statements. The control operations also ensure that bookkeeping records provide reliable and comprehensive information.
Controls implemented to secure proper and reliable accounting include, for instance, analysis of facts and developments on the basis
MANAGEMENT REPORT
113
of specific indicators. Separation of administrative, execution, settlement and authorisation functions and the implementation of these
functions by different persons reduces the potential for fraudulent
operations. Organisational measures also aim to capture any corporate or Group-wide restructuring or changes in sector business operations rapidly and appropriately in Group accounting. They also ensure, for instance, that bookkeeping transactions are correctly
recognised in the period in which they occur in the event of changes
in the IT systems used by the accounting departments of Group
companies. The internal control system likewise ensures that changes
in the TUI Group’s economic or legal environment are mapped and
that new or amended accounting standards are correctly applied.
The TUI Group’s accounting policies together with the International
Financial Reporting Standards (IFRS ) in compliance with EU legis
lation, govern the uniform accounting and measurement principles
for the German and foreign companies included in TUI ’s consolidated
financial statements. They include general accounting principles and
methods, policies concerning the statement of financial position, income statement, notes, management report, cash flow statement
and segment reporting.
The TUI Group’s accounting policies also govern specific formal requirements for the consolidated financial statements. Besides defining
the group of consolidated companies, they include detailed guidance
on the reporting of financial information by those companies via the
group reporting system HFM on a monthly, quarterly and year end
basis. TUI ’s accounting policies also include, for instance, specific
instructions on the initiating, reconciling, accounting for and settlement of transactions between group companies or determination of
the fair value of certain assets, especially goodwill.
At Group level, specific controls to ensure proper and reliable Group
accounting include the analysis and, where necessary, correction of the
individual financial statements submitted by the Group companies,
taking account of the reports prepared by the auditors and meetings
to discuss the financial statements which involve both the auditors
and local management. Any further content that requires adjusting
can be isolated and processed downstream.
The control mechanisms already established in the HFM consolidation
system minimize the risk of processing erroneous financial statements. Certain parameters are determined at Group level and have
to be applied by group companies. This includes parameters applicable to the measurement of pension provisions or other provisions
and the interest rates to be applied when cash flow models are used
to calculate the fair value of certain assets. The central implementation of impairment tests for goodwill recognized in the financial
statements secures the application of uniform and standardised
evaluation criteria.
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MANAGEMENT REPORT
Risk Report
With the organisational, control and monitoring structures established by the TUI Group, the internal control and risk management
system enables company-specific facts to be captured, processed and
recognised in full and properly presented in the Group’s accounts.
in particular, cannot be ruled out and will restrict the efficiency and
reliability of the internal control and risk management systems, so
that even Group-wide application of the systems cannot guarantee
with absolute certainty the accurate, complete and timely recording
of facts in the Group’s accounts.
However, it lies in the very nature of the matter that discretionary
decision-making, faulty checks, criminal acts and other circumstances,
Any statements made relate exclusively to subsidiaries according to
IFRS 10 included in TUI AG ’s consolidated financial statements.
5.
DISCLAIMER
Overall assessment by the Executive Board and Report on expected development
MANAGEMENT REPORT
115
OVER ALL A SSE SSMENT BY THE
E XECUTIVE BOARD AND REPORT
ON E XPEC TED DE VELOPMENT
KEY FIGURES
TA R G E T 2014 / 15
TA R G E T A C H I E V E M E N T
OUTLOOK
A C T U A L 2014 / 15
TA R G E T 2015 / 16
B R A N D T U R N O V E R in € bn
n. a.
22.6
+ 6.7 %1
at least + 5 %1
2 – 4 %1
20.0
+ 3.6 %1
at least + 3 %1
+ 10 – 15 %1
1,069
+ 15.4 %1
at least + 10 %1
220
204
180
costs
costs
costs
800
826
750
gross capex
gross capex
net capex and investments
T U R N O V E R in € bn
E B I TA ( U N D E R LY I N G ) in € m
A DJ U S T M E N T S 2 in € m
C A S H C A P E X A N D I N V E S T M E N T S in € m
N E T D E B T in € bn
broadly
neutral
1
2
Variance year-on-year at constant currency in %, based on the current group structure
Comprises SDI s and PPA
0.2
net debt
0.5
ca.
net debt
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MANAGEMENT REPORT
Comparison of the actual business performance in
2014 / 15 with the forecast
In financial year 2014 / 15, the TUI Group’s performance exceeded
our original forecast. The TUI Group’s underlying EBITA rose by
22.9 % to € 1,069.0 m in financial year 2014 / 15. Excluding the positive
foreign exchange effects included in these earnings, in particular
from the rise of sterling against the euro in the period under review,
the amount corresponds to the target we communicated of achieving
an operating result of around € 1 bn on a constant currency basis.
At an increase of 8.0 %, the TUI Group’s turnover climbed substantially in the period under review, in particular due to foreign exchange
effects. On a constant currency basis, the TUI Group’s turnover
growth stood at 3.6 %, placing it at the upper end of the range originally communicated in our forecast.
Investments in other intangible assets and property, plant and
equipment were slightly higher than expected at € 826.4 m. With a
net liquidity of € 213.7 m carried at the end of financial year 2014 / 15,
the development of the TUI Group’s net debt was slightly above the
broadly neutral position we had expected.
Due to the sound operating performance, the Group also achieved
an increase in its reported EBITA , which grew by 11.3 % to € 865.3 m.
Expected changes in the economic framework
EXPECTED DEVELOPMENT OF GROSS DOMESTIC PRODUCT
Var. %
2016
2015
World
Eurozone
Germany
France
3.6
1.6
1.6
1.5
2.2
2.8
– 0.6
1.0
6.3
7.5
3.1
1.5
1.5
1.2
2.5
2.6
– 3.8
0.6
6.8
7.3
UK
US
Russia
Japan
China
India
Source: International Monetary Fund ( IMF ), World Economic Outlook, October 2015
M A C R O E C O N O M I C S I T U AT I O N
The International Monetary Fund (IMF, World Economic Outlook,
October 2015) expects average world gross domestic product
growth of 3.1 % for calendar year 2015. For 2016, the IMF expects
the global economy to grow by 3.6 %. While higher growth rates are
expected for the advanced countries the outlook for the emerging
markets has become weaker primarly reflecting declining commodity
prices and disruptions in domestic markets.
for calendar year 2015 (source: UNW TO , World Tourism Barometer,
October 2015).
EFFECTS ON THE TUI GROUP
As a leading tourism provider, the TUI Group depends on the development of consumer demand in the large source markets in which we
operate with our tour operator and hotel brands. Our budget is
based on the assumptions used as a basis by the IMF to predict the
future development of the global economy.
MARKE T TREND IN TOURISM
UNW TO expects international tourism to continue growing globally
in this decade. For the next few years, average weighted growth of
around 3 % per annum has been forecast (source: UNW TO , Tourism
Highlights, 2014 edition). In the first eight months of 2015, international arrivals grew by 4.3 %. UNW TO expects growth of 3 % to 4 %
Apart from the development of consumer sentiment, political stability
in the destinations is a further crucial factor affecting demand for
holiday products. In our view, our business model is sufficiently flexible
to compensate for the challenges we currently face.
The expected turnover growth assumed in our budget for financial
year 2015 / 16, is slightly above the UNW TO forecast. Our strategic
focus is to further align our brands in the source markets, further
expanding our Group-owned hotel portfolio and expanding our
cruise business, in particular under the TUI Cruises brand.
Expected development of Group turnover,
earnings and adjustments
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117
dated turnover, earnings and cash flow, and has significant balance
sheet balances in non-Euro currencies, in particular GBP, USD and
SEK . Taking account of the seasonal nature of the tourism business,
the development of these currencies against the euro in the course
of the year therefore strongly impacts the financial indicators carried
in TUI Group’s consolidated financial statements. The comments on
the expected development of our Group in financial year 2015 / 16
provided below are based on a constant currency exchange rates,
based on the rates prevailing in financial year 2014 / 15.
TUI GROUP
Our consolidated financial statements are translated using monthly
exchange rates. The TUI Group generates a large portion of consoli-
E X P E C T E D D E V E L O P M E N T O F G R O U P T U R N O V E R , U N D E R LY I N G E B I TA A N D A D J U S T M E N T S
Expected Development vs. PY
2014 / 15
2015 / 16*
€ million
Brand turnover
Turnover
Underlying EBITA
Adjustments (SDI s and PPA )
22,584
20,012
1,069
204
at least 5 % growth
at least 3 % growth
at least 10 % growth
approx. € 180 m cost
* Based on constant currency, without discontinued operations
BR AND TURNOVER
ADJUSTMENTS
A significant proportion of earnings growth will be delivered by TUI ’s
joint ventures, however, due to equity accounting the revenue from
these businesses is excluded from reported turnover. We have
therefore introduced the concept of brand turnover, to show more
clearly the total revenue generated by TUI brands, the key ones
being TUI Cruises and our Canadian tour operator strategic venture.
We expect brand turnover to rise by at least 5 % in financial year
2015 / 16 at constant currency.
For financial year 2015 / 16 we expect purchase price allocations and
net one-off costs (mainly in relation to the delivery of merger synergies) of approximately € 180 m to be carried as adjustments.
RO I C A N D E CO N O M I C VA LU E A D D E D
Due to the enhanced operating result, we expect ROIC to improve
slightly in financial year 2015 / 16; depending on the development of
the TUI Group’s capital costs, this is also expected to result in a
slight increase in economic value added.
TURNOVER
We expect turnover to rise by at least 3 % at constant currency in
financial year 2015 / 16, primarily due to an anticipated increase in
customer numbers of our tour operators as we deliver our growth
roadmap (as outlined in the Goals and Strategy section of this report).
U N D E R LY I N G E B I TA
In financial year 2015 / 16, underlying EBITA by the TUI Group is
expected to grow by at least 10 % at constant currency as we deliver
our growth roadmap (as outlined in the Goals and Strategy section
of this report). Risks relate to the development of customer numbers
against the backdrop of continued volatility in the economic environment for our key source markets, demand for our Group hotels and
cruises and the delivery of merger synergies.
See Risk report for further details.
DE VELOPMENT IN THE SEGMENTS
The development outlined below is based on current trading, our
growth roadmap and the relative performance of our segments during
financial year 2014 / 15. This development is sensitive to fluctuations
in customer demand from specific source markets and customer
segments, as well as the development of input costs. The benefit of
our diversified business model is that such fluctuations may be offset
by improved demand elsewhere in the business.
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MANAGEMENT REPORT
SOURCE MARKETS
CRUISES
Based on current trading and assuming constant currency exchange
rates, we would expect the Source Markets to deliver at least 10 %
underlying earnings growth at constant currency. Based on their relative performances during the financial year ended 2014 / 15, we
would expect the growth percentage for Central and Western Region
in financial year 2015 / 16 to exceed that of Northern Region.
Based on the full year operation of Mein Schiff 4 and delivery of
Mein Schiff 5 during financial year 2015 / 16, we expect growth in
Cruises underlying EBTIA to significantly exceed our Group guidance
of at least 10 %.
HOTELS & RESORTS
We are delivering phased growth in our key hotel and club brands and
also expect to deliver further occupancy improvements in financial
2015 / 16. Taking into account the non-recurring gain on disposal of
a Riu hotel in financial year 2014 / 15, we would expect growth in
Hotels & Resorts at the lower end of our Group underlying EBITA
guidance of at least 10 %.
S PE C I A L I S T T R AV E L
Specialist Travel comprises the segments Specialist Group and Hotel
beds Group that operate in seperate markets with different developments. Based on current trading and our strategy to maximize the
growth and value of these businesses, we would expect underlying
EBITA in Specialist Travel to develop in line with the Source Markets.
Expected development of Group financial position
EXPECTED DEVELOPMENT OF GROUP FINANCIAL POSITION
Expected development vs. PY in %
2014 / 15
2015 / 16*
€ million
Net capex and investments
Net debt
654.7
213.7
approx. € 750 m
slight increase
* At constant currency
NET CAPEX AND INVESTMENTS
In the light of investment decisions already taken and projects in the
pipeline, we expect net cash capex and investments to be approximately € 750 m in financial year 2015 / 16. This includes anticipated pre-
delivery payments for aircraft and disposal proceeds for fixed assets.
Most of these funds will be used for investments in property, plant
and equipment. The planned investments include the expansion and
refurbishment of our hotel portfolio, introduction of new production
and booking systems and the purchase of aircraft spares and yachts.
NET DEBT
At the balance sheet date, the Group’s net debt amounted to
€ 213.7 m. Due to the expected increase in financing volume for aircraft
and a cruise ship in the UK on the basis of finance leases, we expect
the TUI Group’s net debt to increase in financial year 2015 / 16 to
around € 0.5 bn.
Sustainable development
C L I M AT E P R O T E C T I O N A N D E M I S S I O N S
Greenhouse gas emissions and the impact of these emissions on
climate change pose one of the major global challenges for the tourism
sector. In September 2015 TUI Group launched its sustainability
strategy, Better Holidays, Better World 2015 – 2020. By 2020 we will
operate Europe’s most carbon-efficient airlines and reduce the carbon
intensity of our global operations by 10 % by 2020. We will reduce
TUI airlines carbon emissions per passenger km (g CO 2 / rpk) by
10 % (against the baseline of 2013 / 14).
Overall Executive Board assessment
of the TUI Group’s current situation and
expected development
At the date of preparation of the Management Report (8 December
2015), we uphold our positive assessment of the TUI Group’s economic situation and outlook for financial year 2015 / 16. With its
finance profile and branded customer services portfolio, the TUI
Group is well positioned in the market. In the first few weeks of the
new financial year 2015 / 16 the overall business performance has
matched expectations.
As against the prior year reference period, we expect our Group’s
operating result to grow year-on-year due to the improved operating
performance of our Sectors. The TUI Group’s underlying earnings
are expected to rise by at least 10 % year-on-year, on a constant
currency basis.
Our roadmap for growth over the next three years has enabled us to
provide updated guidance for the future prospects of our Group. We
intend to deliver at least 10 % underlying EBITA C AGR over the next
three years to 2017 / 18. Our long-term target for the TUI Group’s
gross capex (excluding advance payments on aircraft orders) is 3 %
of consolidated turnover.
Opportunity Report
The TUI Group’s opportunity management follows the Group strategy for core business Tourism. Responsibility for the systematic detection and use of opportunities rests with the operational management of the Tourism Sectors Source markets, Hotels & Resorts and
Cruises. Market scenarios and critical success factors for the individual
Sectors are analysed and assessed in the framework of the Group-
MANAGEMENT REPORT
119
wide planning and control process. The core task of the Group’s
Executive Board is to secure profitable growth for the TUI Group by
optimising the shareholding portfolio and developing the Group
structure over the long term.
Overall, the TUI Group is well positioned to benefit from opportunities
resulting from the main trends in its markets.
OPPORTUNITIE S FROM THE DE VELOPMENT OF THE OVER ALL
FR AME WORK
Should economic development prove better than expected, the TUI
Group and its Sectors would benefit from the resulting increase in
demand in the travel market. Moreover, changes in the competitive
environment might create opportunities for the TUI Group in individual markets.
C O R P O R AT E S T R AT E G Y
We see opportunities for further organic growth in particular by
expanding our hotel portfolio and cruise business. As market leader,
we also intend to benefit from demographic change and the resulting
expected increase in demand for high-quality travel at an attractive
price / performance ratio in the long term.
O P E R AT I O N A L O P P O R T U N I T I E S
We intend to improve our competitive position further by offering
unique content and further expanding controlled distribution in
Source Markets, in particular online distribution. We also see operational opportunities arising from stronger integration of our content
and tour operator business.
OTHER OPPORTUNITIES
Moreover, we consider the potential sale of our remaining stake in
Container Shipping as an opportunity to further improve the TUI
Group’s key financial ratios.
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REPORT ON ECONOMIC POSITION
Macroeconomic and industry framework
Macroeconomic development
DEVELOPMENT OF GROSS DOMESTIC PRODUCT
Var. %
2015
2014
World
Eurozone
Germany
France
3.1
1.5
1.5
1.2
2.5
2.6
– 3.8
0.6
6.8
7.3
3.4
0.9
1.6
0.2
3.0
2.4
0.6
– 0.1
7.3
7.3
UK
US
Russia
Japan
China
India
Source: International Monetary Fund ( IMF ), World Economic Outlook, October 2015
In calendar year 2015, the global economy continued to grow moderately. Overall, the International Monetary Fund in its most recent
outlook (IMF, World Economic Outlook, October 2015) projects global
growth for 2015 at 3.1 %, down year-on-year. Economic momentum
picked up gradually in the advanced economies, while growth was
very moderate in the emerging markets.
Development of tourism
C H A N G E O F I N T E R N AT I O N A L T O U R I S T A R R I VA L S V S . P R I O R Y E A R
Var. %
World
Europe
Asia and the Pacific
Americas
Afrika
Middle East
Source: UNW TO World Tourism Barometer, October 2015
* Period January till August
2015*
2014
+ 4.3
+ 5.3
+ 4.3
+ 4.2
– 5.4
+ 3.6
+ 4.2
+ 2.4
+ 5.7
+ 8.4
+ 1.8
+ 6.2
In calendar year 2014, international arrivals grew worldwide by 4.2 %
to € 1.13 bn. This trend continued for the first eight months of calendar
year 2015, with growth totalling 4.3 % within that period. Europe
remained the most popular region worldwide, showing the strongest
increase in arrivals at 5.3 %. The Eurozone benefited from the weakness of its currency together with a gradual economic recovery. For
the full year 2015, UNW TO expects the global travel and tourism
market to grow by 3 to 4 %. The stable growth trend observed in
tourism in the past few years has thus held up (UNW TO , World
Tourism Barometer, October 2015).
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121
Customer numbers in the TUI Group’s source markets rose by a
total of 1.6 % on the prior year in financial year 2014 / 15. This growth
was mainly attributable to the positive development in the UK . This
source market benefited from the expansion of the Boeing 787
long-haul programme and growth in TUI unique travel.
Business development in the source markets, see page 127 et seqq.
Key exchange rates and commodity prices
E X C H A N G E R AT E U S D
E X C H A N G E R AT E G B P
USD / EUR
GBP / EUR
1.50
0.90
1.40
0.80
1.30
1.20
0.70
1.10
OC T. 13
SEPT. 14
SEPT. 15
OC T. 13
SEPT. 14
SEPT. 15
The exchange rate charts are presented on the basis of the indirect quotation format
customary in the foreign exchange market. If the exchange rate falls, the value of the
p resented currency rises against the euro. By contrast, if the exchange rate rises, the
v alue of the currency falls against the euro.
OIL PRICE
Brent (USD / Barrel)
The TUI Group companies operate on a worldwide scale. This presents
financial risks for the TUI Group, arising from changes in exchange
rates and commodity prices.
120
100
80
60
40
20
OC T. 13
SEPT. 14
SEPT. 15
The essential financial transaction risks from operations relate to
euros and US dollars. They mainly result from foreign exchange
items in the individual Group companies, for instance aircraft fuel
and bunker oil, ship handling costs or products and services sourced
by hotels. The value of sterling against the euro is of relevance for
the translation of results generated in the UK market in TUI ’s consolidated financial statements.
122
MANAGEMENT REPORT
In the period under review, the average exchange rate of the US
dollar against the euro fell by around 11.1 % from 1.26 USD / euro to
1.12 USD / euro. The average exchange rate of sterling against the euro
decreased by around 5.1 % from 0.78 GBP / euro to 0.74 GBP / euro
in the period under review. Both currencies thus appreciated against
the euro.
Changes in commodity prices affect the TUI Group, in particular in
procuring fuels such as aircraft fuel and bunker oil. The price of Brent
oil almost halved in the financial year under review, amounting to
48.37 USD per barrel as at 30 September 2015.
In Tourism, most risks related to changes in exchange rates and
price risks from fuel sourcing are hedged by derivatives. Information
on hedging strategies and risk management as well as financial
transactions and the scope of such transactions at the balance sheet
date is provided in the sections Financial Position and Risk Report in
the Management Report and the section Financial Instruments in
the Notes to the consolidated financial statements.
Fincancial Position see page 138
Risk Report see page 97
Financial Instrument see page 262
Changes in the legal framework
In financial year 2014 / 15, there were no changes in the legal framework with material impacts on the TUI Group’s business performance.
Group earnings
Comments on the consolidated income statement
Financial year 2014 / 15 brought a markedly positive development in
the TUI Group’s earnings position. The operating result (underlying
EBITA ) of the TUI Group improved by 22.9 % to € 1,069.0 m in the
period under review. This growth was driven in particular by the
very good performance of Northern Region, Hotels & Resorts and
Cruises. The significant increase in the result from continued operations to € 448.4 m derived not only from an improved operating
performance, but also from a better interest result and lower income taxes following the merger with TUI Travel.
I N C O M E S TAT E M E N T O F T H E T U I G R O U P F O R T H E P E R I O D F R O M 1 O C T O B E R 2 0 14 T O 3 0 S E P T E M B E R 2 0 15
2014 / 15
2013 / 14
restated
Var. %
20,011.6
17,616.3
2,395.3
1,715.4
51.2
8.0
37.9
370.1
144.5
535.4
87.0
448.4
– 68.8
379.6
340.4
39.2
18,536.8
16,300.8
2,236.0
1,533.8
35.9
2.1
36.8
300.9
26.8
498.7
212.5
286.2
– 15.4
270.8
90.4
180.4
+ 8.0
+ 8.1
+ 7.1
+ 11.8
+ 42.6
+ 281.0
+ 3.0
+ 23.0
+ 439.2
+ 7.4
– 59.1
+ 56.7
– 346.8
+ 40.2
+ 276.5
– 78.3
€ million
Turnover
Cost of sales
Gross profit
Administrative expenses
Other income
Other expenses
Financial income
Financial expenses
Share of result of joint ventures and associates
Earnings before income taxes
Income taxes
Result from continuing operations
Result from discontinued operation
Group profit for the year
Group profit for the year attributable to shareholders of TUI AG
Group profit for the year attributable to non-controlling interest
MANAGEMENT REPORT
123
Turnover and cost of sales
TURNOVER
€ million
2014 / 15
2013 / 14
Var. %
Northern Region
Central Region
Western Region
Hotels & Resorts
Cruises
Other Tourism
Tourism
Specialist Group
Hotelbeds Group
All other segments
TUI Group
Discontinued operations
Sum of the segments
7,014.9
5,601.8
2,903.4
574.8
273.3
496.1
16,864.3
1,835.1
1,227.1
85.1
20,011.6
69.7
20,081.3
6,200.8
5,426.0
2,970.2
515.9
281.0
478.4
15,872.3
1,625.5
999.7
39.3
18,536.8
74.8
18,611.6
+ 13.1
+ 3.2
– 2.2
+ 11.4
– 2.7
+ 3.7
+ 6.2
+ 12.9
+ 22.7
+ 116.5
+ 8.0
– 6.8
+ 7.9
In financial year 2014 / 15, turnover by the TUI Group rose by 8.0 %
to € 20.0 bn, partly due to foreign exchange effects. On a constant
currency basis, adjusted in particular for the effect of the increase in
sterling against the euro, turnover grew by 3.6 %, showing stronger
growth than customer numbers in the source markets, which rose
1.6 % year-on-year. Turnover is presented alongside the cost of
sales, which were up 8.1 % in the period under review.
GROSS PROFIT
Gross profit, i.e. the difference between turnover and the cost of
sales, increased by € 159.3 m to around € 2.4 bn in financial year
2014 / 15.
A D M I N I S T R AT I V E E X P E N S E S
Administrative expenses rose by € 181.6 m year-on-year to € 1,715.4 m.
Apart from foreign exchange effects, the year-on-year increase in
administrative expenses mainly results from reorganisation and restructuring measures implemented in the period under review, in
particular for the conversion of the corporate centre, the planned
integration of incoming agencies into the source market organisation and the combination of the airlines. The restructuring projects
in source markets Germany, Benelux and Nordic also resulted in
higher administrative expenses compared with the prior year. Further expenses relate in particular to impairments on input tax claims
in an Italian subsidiary and transfers to provisions for pending litigation in connection with the acquisition of a Turkish hotel.
OTHER INCOME /OTHER E XPENSE S
In financial year 2014 / 15, other income and other expenses of
€ 51.2 m mainly included book profits from the sale of a Riu Group
hotel in December 2014 (€ 16.9 m) and from the sale of two Greek
hotel companies in Q3 2014 / 15 (€ 10.1 m). Income was also generated from the sale of the companies in the PE AK Adventure Travel
Group (€ 4.4 m) and the sale of two hotels in the Specialist Group as
well as sale-and-lease-back transactions with aircraft. Additional income relates to the recycling to the income statement of cumulative
foreign exchange gains previously carried in equity in the wake of a
capital reduction in a subsidiary.
Other income carried in the prior year mainly related to profits from
sale-and-lease-back transactions with aircraft, book profits from
the disposal of real estate, the sale of a hotel company in Switzerland
and from gains on disposal from the sale of shareholdings.
Other expenses carried for 2014 / 15 totalled € 8.0 m, resulting mainly
from foreign exchange losses in connection with capital reductions
and liquidations of subsidiaries and from expenses for aircraft saleand-lease-back transactions.
N E T F I N A N C I A L R E S U LT
In the period under review, the net financial result declined by
€ 68.1 m to € – 332.2 m despite a considerable reduction in the interest expenses in the reporting period. The increase in overall financial expenses was driven by the impairment of € 147.1 m on the
stake in Hapag-Lloyd AG , classified as a financial instrument available for sale, in the period under review.
124
MANAGEMENT REPORT
The decline in interest expenses results from a change in the structure of the financial liabilities. All convertible bonds were fully converted in financial year 2014 / 15. Accordingly, the interest expense
for convertible bonds declined by € 95.9 m. TUI AG also repaid a
bank loan of € 100 m in August 2014. As a result, the interest expense declined by a further € 12.9 m.
The new funding scheme in connection with the merger between
TUI AG and TUI Travel PLC had offsetting effects. The credit line
granted to TUI Travel was replaced by a credit line granted to
TUI AG . The borrowing costs for the credit facility of TUI Travel PLC
previously carried as prepaid expenses of € 14.2 m were fully taken
through profit and loss in Q1 2014 / 15. Moreover, the high-yield
bond worth € 300.0 m issued previously by TUI AG in September 2014 resulted in interest expenses of € 14.7 m. In addition, the
acquisition of Europa 2 led to an increase in financial liabilities and a
rise in interest expenses of € 9.3 m. Interest expenses rose by
€ 10.2 m from the increase in finance lease liabilities.
GROUP PROFIT
Group profit increased by € 108.8 m year-on-year to € 379.6 m in
financial year 2014 / 15.
S H A R E I N G R O U P P R O F I T AT T R I B U TA B L E T O T U I A G
SHAREHOLDERS
The share in Group profit attributable to the TUI AG shareholders
improved from € 90.4 m in the prior year to € 340.4 m in financial
year 2014 / 15. Apart from the general improvement in the Group’s
performance, the increase is attributable to the fact that the
non-controlling shareholders in TUI Travel PLC ceased to exist on
completion of the merger between TUI AG and TUI Travel PLC in
December 2014.
NON-CONTROLLING INTERESTS
Non-controlling interests in Group profit for the year totalled
€ 39.2 m in the period under review. They related to the external
shareholders of TUI Travel PLC until the completion of the merger
with TUI AG and to the companies in Hotels & Resorts.
S H A R E O F R E S U LT S O F J O I N T V E N T U R E S A N D A S S O C I AT E S
The result from joint ventures and associates comprises the proportionate net profit for the year of the associated companies and joint
ventures and impairments of goodwill for these companies. In the
period under review, the at equity result totalled € 144.5 m. The significant increase of € 117.7 m partly resulted from the higher profit
contribution by TUI Cruises.
I N C O M E TA X E S
The year-on-year decline in income taxes in financial year 2014 / 15
is mainly attributable to a revaluation of the deferred tax assets for
loss carryforwards following the merger between TUI AG and
TUI Travel PLC .
R E S U LT F R O M D I S C O N T I N U E D O P E R AT I O N
The result from discontinued operation shows the after-tax result of
the LateRooms Group, classified as a discontinued operation.
EARNINGS PER SHARE
The interest in Group profit for the year attributable to TUI AG
shareholders after deduction of non-controlling interests totalled
€ 340.4 m (previous year € 90.4 m) in 2014 / 15. Basic earnings per
share therefore amounted to € 0.64 (previous year € 0.26) in financial year 2014 / 15.
EBITA , underlying EBITA und underlying earnings
per share
Key indicators used to manage the TUI Group are EBITA and underlying EBITA . We consider EBITA to be the performance indicator
best suited to explain the development of the TUI Group’s operating
performance. EBITA comprises earnings before interest, taxes and
goodwill impairments; it does not include the results from container
shipping operations measured at equity nor the results from the
measurement of interest hedging instruments.
MANAGEMENT REPORT
125
R E C O N C I L I AT I O N T O U N D E R LY I N G E A R N I N G S
2014 / 15
2013 / 14
restated
Var. %
535.4
– 0.9
147.1
183.7
865.3
498.7
54.2
–
224.3
777.2
7.4
n. a.
n. a.
– 18.1
11.3
– 5.2
64.8
76.2
67.9
1,069.0
– 3.7
43.6
71.8
– 19.0
869.9
– 40.5
48.6
6.1
n. a.
22.9
2014 / 15
2013 / 14
Var. %
505.3
72.9
56.6
195.7
80.5
– 26.4
884.6
38.5
82.3
– 140.1
865.3
– 68.1
797.2
428.3
140.3
61.6
199.1
24.2
– 27.6
825.9
26.6
29.1
– 104.4
777.2
– 4.7
772.5
+ 18.0
– 48.0
– 8.1
– 1.7
+ 232.6
+ 4.3
+ 7.1
+ 44.7
+ 182.8
– 34.2
+ 11.3
n. a.
+ 3.2
€ million
less: Profit (prior year loss) on Container Shipping measured at equity
plus: Loss on measurement of financial investment in Container Shipping
plus: Net Interest expense and expense from the measurement of interest hedges
EBITA
Adjustments:
less: Gain on disposals (prior year loss)
plus: Restructuring expense
plus: Expense from purchase price allocation
plus: Expense (prior year income) from other one-off items
Underlying EBITA
Reported earnings (EBITA ) of the TUI Group rose by € 88.1 m to
€ 865.3 m due to the very good operating performance in financial
year 2014 / 15.
E B I TA
€ million
Northern Region
Central Region
Western Region
Hotels & Resorts
Cruises
Other Tourism
Tourism
Specialist Group
Hotelbeds Group
All other segments
TUI Group
Sum of the segments
In order to explain and evaluate the operating performance of the
segments, earnings adjusted for special one-off effects (underlying
EBITA ) are presented below. Underlying EBITA has been adjusted
for gains on disposal of financial investments, restructuring expenses
according to IAS 37, all effects from purchase price allocations, ancillary acquisition costs and conditional purchase price payments
and other expenses for and income from one-off items.
One-off items carried here include adjustments for income and expense items that reflect amounts and frequencies of occurrence
rendering an evaluation of the operating profitability of the
segments and the Group more difficult or causing distortions. These
items include in particular major restructuring and integration expenses not meeting the criteria of IAS 37, material expenses for litigation, gains and losses from the sale of aircraft and other material
business transactions with a one-off character.
The TUI Group’s underlying EBITA rose by € 199.1 m to € 1,069.0 m
in financial year 2014 / 15.
126
MANAGEMENT REPORT
U N D E R LY I N G E B I TA
€ million
Northern Region
Central Region
Western Region
Hotels & Resorts
Cruises
Other Tourism
Tourism
Specialist Group
Hotelbeds Group
All other segments
TUI Group
Sum of the segments
In the period under review, adjustments worth € 15.1 m were carried
for income, compared with adjustments on underlying expenses
amounting to € 218.8 m, taking into account the expenses for purchase price allocations.
Overall, one-off expenses worth € 46.6 m were incurred in connection with the merger between TUI AG and the former TUI Travel PLC .
They included an amount of € 30.9 m for the restructuring of the corporate centre and € 15.7 m for the planned integration of the incoming agencies in the source market organisations.
The adjustments primarily related to the following facts and circumstances:
GAINS ON DISPOSAL
In financial year 2014 / 15, gains on disposal worth € 5.2 m had to
be adjusted for. They related in particular to capital reductions in
subsidiaries.
RESTRUC TURING COSTS
In financial year 2014 / 15, restructuring costs of € 64.8 m had to be
adjusted for. This amount included € 29.6 m for the conversion of
the corporate centre and € 9.6 m for the planned integration of the
incoming agencies in the source market organisations. A further
€ 9.0 m related to the combination of the airlines within the oneAviation project, with a further € 13.5 m relating to reorganisation in the
German, Benelux and Nordic source markets. An additional € 2.8 m
related to restructuring activities in the Hotelbeds Group segment.
2014 / 15
2013 / 14
Var. %
530.3
103.5
68.8
234.6
80.5
– 21.1
996.6
56.2
116.8
– 100.6
1,069.0
– 8.5
1,060.5
398.3
163.0
81.7
202.8
9.7
– 22.3
833.2
45.5
101.7
– 110.5
869.9
– 2.8
867.1
+ 33.1
– 36.5
– 15.8
+ 15.7
+ 729.9
+ 5.4
+ 19.6
+ 23.5
+ 14.8
+ 9.0
+ 22.9
– 203.6
+ 22.3
E X P E N S E S F O R P U R C H A S E P R I C E A L L O C AT I O N S
In financial year 2014 / 15, expenses for purchase price allocations
worth € 76.2 m were adjusted for; they related in particular to scheduled amortisation of intangible assets from acquisitions made in
previous years.
ONE-OFF ITEMS
Net expenses for one-off items of € 67.9 m included an amount of
€ 28.3 m relating to the source markets. Apart from expenses for the
commissioning of new Boeing 787 Dreamliners worth € 6.9 m, € 3.1 m
were carried as adjustments for strike costs at Corsair in connection
with the originally planned sale of the company. A further € 7.5 m
related to reorganisation in Germany, Benelux and France. In Hotels
& Resorts, adjustments worth € 18.6 m were carried for impairments
on input tax claims in an Italian subsidiary and transfers to provisions for pending litigation in connection with the acquisition of a
Turkish hotel worth € 15.6 m. In the Hotelbeds Group segment, adjustments of € 6.1 m were carried for expenses for the planned integration of the incoming agencies in the source market organisations.
All other segments essentially carried adjustments for pension obligations in the UK and for CP Ships Canada worth € 7.1 m.
P R O F O R M A U N D E R LY I N G E A R N I N G S P E R S H A R E
In order to provide a comparable basis for TUI Group’s underlying
earnings per share going forward, a pro forma calculation is included
below. The calculation is based on the issued share capital as at
30 September 2015, and therefore adjusts for the impact of bond
conversions during the year, as well as the impact on minority interest
and share count arising from the merger with TUI Travel PLC during
December 2014. The 32.4 % increase in pro forma underlying earnings
per share is driven by the growth in underlying EBITA and reduction
in underlying effective tax rate to 25 %.
MANAGEMENT REPORT
127
P R O F O R M A U N D E R LY I N G E A R N I N G S P E R S H A R E T U I G R O U P
€ million
EBITA (underlying)
less: Net interest expense
plus: Interest expense on convertible bonds
Underlying profit before tax
Income taxes (underlying)*
Underlying Group profit
Minority interest
Hybrid interest expense
Underlying Group profit attributable to TUI shareholders of TUI AG
Number of shares (pro forma)
Pro forma underlying earnings per share
No. million
2014 / 15
2013 / 14
1,069.0
– 183.7
19.0
904.3
226.1
678.2
89.8
10.9
577.5
586.6
0.98
869.9
– 224.3
108.1
753.7
221.6
532.1
71.6
23.2
437.3
586.6
0.75
* The underlying effective tax rate is calculated based on the underlying profit before tax (excluding separately disclosed items, acquisition related expenses and impairment charges).
Business development by segments
Current and future trading in Tourism
In Tourism, travel products are booked on a seasonal basis with different lead times. The release of bookings for individual seasons
takes place at different points in time, depending on the design of
the booking and reservation systems in each source market. Moreover,
load factor management ensures that the tour operator capacity
available for bookings is seasonally adjusted to actual and expected
demand.
At the end of financial year 2014 / 15, current trading by our source
markets for the winter season 2015 / 16 was as follows as compared
with the prior year:
C U R R E N T T R A D I N G1
Var. %
Northern Region
UK
Nordics
Central Region
Germany
Western Region
Benelux
Total source markets
Accommodation Wholesaler3
1
2
3
As at 29 November 2015 (on a constant currency basis)
These statistics relate to all customers whether risk or non-risk.
Sales refer to total transaction value ( T T V ) and customers refer to roomnights.
Average
selling price2
+4
+2
+8
+5
+5
+1
+2
+4
+8
Winter season 2015 / 16
Total
customers2
Total sales 2
+6
+6
+6
+5
+4
–1
+1
+4
+ 19
+2
+4
–2
flat
–1
–2
–1
flat
+ 11
128
MANAGEMENT REPORT
For the 2016 summer season, already available for bookings in the
UK , current trading was 11 % ahead of the prior year in November 2015. Average selling prices were flat year-on-year.
Disclosures on current trading are regularly published on TUI ’s website in the framework of the TUI Group’s quarterly reporting.
Trading by the Hotels & Resorts segment largely mirrors customer
numbers in the source markets, as a high proportion of the Groupowned hotel beds are taken up by TUI tour operators. In the Cruises
segment, advance bookings were up year-on-year at the balance
sheet date with sound demand levels, primarily due to the fleet expansion effected in the period under review.
www.tuigroup.com/en-en/investors/news
Our key operating indicators developed as follows in our main
source markets:
Source markets
D I R E C T D I S T R I B U T I O N M I X 1 in %
O N L I N E M I X 2 in %
C U S T O M E R S 3 in ’000
2014 / 15
2014 / 15
2014 / 15
2013 / 14
2013 / 14
2013 / 14
70
41
19,142
68
38
18,844
91
58
6,943
91
56
6,781
44
15
7,168
39
12
7,115
68
48
5,031
66
45
4,948
SOURCE MARKETS
NORTHERN REGION
CENTRAL REGION
WESTERN REGION
1
Share of sales via own channels (retail and online)
Share of online sales
3Germany customers restated to include seat only sales distributed by TUI fly.com. Excl. guest numbers from our joint ventures in Canada and Russia
2
MANAGEMENT REPORT
129
Northern Region
Northern Region comprises TUI ’s tour operators and airlines and
the cruise business in the UK , Ireland and the Nordics. The segment
also comprises the strategic stake held in Sunwing in Canada and
TUI Russia, operating in the CIS countries.
NORTHERN REGION – KEY FIGURES
€ million
Turnover
Underlying EBITA
EBITA
In financial year 2014 / 15 the Northern Region recorded an increase
in customer numbers of 2.4 % year-on-year, with particularly strong
growth in the UK . Turnover grew by 13.1 %, on a constant currency
basis the increase was 4.6 %. Northern Region underlying EBITA improved by € 132.0 m in the year. This included € 7 m impact from
Tunisia for the UK in June and € 49 m positive foreign exchange
translation.
In the UK we delivered a strong trading performance. Customer volumes grew by 5 % in the year, driven by further growth in our unique
offering. The Winter season saw the first full Winter operations of
Sensatori in Jamaica, followed by the opening of two new Sensatori
units in Ibiza and Turkey during the Summer, and the addition of
Robinson to the portfolio. Long-haul customer volumes grew by
13 % in the year, enabled by the expansion of our 787 fleet, with
Mexico up 19 % and Jamaica up 39 %. We also saw strong short-haul
growth to Mainland Spain and Balearics. We have broadened our
customer offering to include third party flights, giving our customers
more choice on departure time and duration for our unique package
holidays. Over 50,000 customers took advantage of this during
2014 / 15. Direct distribution remains in excess of 90 %, we continue
to drive growth in online, with that channel accounted for 54 % of
holidays in the year, up three percentage points.
2014 / 15
2013 / 14
Var. %
7,014.9
530.3
505.3
6,200.8
398.3
428.3
+ 13.1
+ 33.1
+ 18.0
In the Nordics we also delivered an improvement in underlying EBITA ,
with an improvement in trading margins (particularly to the Canaries,
Thailand and Greece) as a result of capacity rationalisation and delivery of further operational efficiencies. Direct distribution remains
in excess of 90 %, with online distribution at 72 %, up two percentage points.
In Canada, our strategic venture Sunwing delivered further expansion
of its differentiated offering, in particular through its subsidiary Blue
Diamond Resorts which manages and builds hotels in the Caribbean
and Mexico.
In October 2015 we reduced our shareholding in the Russia & CIS
joint venture from 50 % to 25 %.
Central Region
Central Region comprises the TUI tour operators in Germany,
Austria, Switzerland and Poland and the TUI fly airline.
CENTRAL REGION – KEY FIGURES
€ million
Turnover
Underlying EBITA
EBITA
The increase in customer numbers of 0.7 % in fiscal year 2014 / 15
resulted in turnover growth of 3.2 %. Central Region underlying EBITA
decreased by € 59.5 m in the year, including € 1 m positive foreign
exchange translation. This was primarily driven by Germany, where
in spite of a 1 % increase in volumes, trading has been challenging.
Following margin pressure in the Canaries and long-haul destina-
2014 / 15
2013 / 14
Var. %
5,601.8
103.5
72.9
5,426.0
163.0
140.3
+ 3.2
– 36.5
– 48.0
tions during Winter, we have experienced further pressure in the
Summer due to additional capacity in the market to destinations
such as Majorca, which in turn has continued to impact margins. This
was compounded by the impact during the early Summer of weaker
trading to Greece, and by the impact of lower demand for Turkey. In
addition, we have made additional investment in distribution this
130
MANAGEMENT REPORT
year, and have had one-off costs of € 8 m in relation to the TUI fly
pension scheme. Direct distribution for Germany has continued to
improve, to 44 % for the year (up five percentage points), with online
distribution at 15 % (up three percentage points).
Western Region
Western Region combines TUI tour operators and Group-owned
airlines in Belgium, the Netherlands and tour operators in France.
WESTERN REGION – KEY FIGURES
€ million
Turnover
Underlying EBITA
EBITA
In fiscal year 2014 / 15, turnover by the Western Region declined by
2.2 % despite an increase in customer numbers of 1.7 %. Western
Region underlying EBITA was down € 12.9 m on prior year. In spite of
a 5 % increase in volumes, Benelux delivered a broadly flat result,
including € 2 m impact from Tunisia in June, costs in association with
the delayed entry into service of an aircraft, and the initial costs for
the rebranding of Arke in the Netherlands to TUI . In France, we are
continuing to remix capacity towards Mediterranean destinations and
have delivered significant further restructuring savings. However, the
continued unpopularity of North African destinations for this source
market means that the result of the year was down on prior year.
2014 / 15
2013 / 14
Var. %
2,903.4
68.8
56.6
2,970.2
81.7
61.6
– 2.2
– 15.8
– 8.1
Hotels & Resorts
The Hotels & Resorts segment comprises all hotels and hotel companies of the TUI Group including the hotel business of former TUI
Travel. They include subsidiaries, joint ventures with local partners,
associates over which significant influence is held, and hotels operated under management contracts.
HOTELS & RESORTS – KEY FIGURES
€ million
Total turnover
Turnover
Underlying EBITA
EBITA
Total turnover by the Hotels & Resorts segment rose by 7.5 % to
€ 1.3 bn year-on-year. Due to closer cooperation with the Group tour
operators and overall sound demand on slightly lower capacity yearon-year, occupancy grew versus the prior year. Average revenues
per bed also benefited from closer cooperation with the Group tour
operators, achieving a very positive result, in particular in the peak
season. Turnover with non-Group third parties grew by 11.4 % yearon-year to € 574.8 m in financial year 2014 / 15.
2014 / 15
2013 / 14
Var. %
1,252.5
574.8
234.6
195.7
1,164.5
515.9
202.8
199.1
+ 7.5
+ 11.4
+ 15.7
– 1.7
In the period under review, underlying earnings by the Hotels & Resorts segment improved by € 31.8 m to € 234.6 m. They included a
book profit of around € 16 m from the sale of the Riu Waikiki hotel,
synergies worth around € 10 m from a post-merger increase in hotel
occupancy of 2 percentage points, and positive foreign exchange
effects of around € 7 m. Earnings were adversely affected by an
amount of around € 43 m incurred to cover the repercussions of the
attack in Tunisia, including € 23 m for accomodation commitments
(leased hotels), € 3 m for lower management fees, and € 17 m provisions against prepayments.
Due to stronger integration of Group-owned hotels with TUI tour
operators, occupancy of owned hotels was increased by 1.7 percentage points in the period under review. Based on the calculations
MANAGEMENT REPORT
131
effected in the framework of the merger, this corresponds to an
improvement in underlying EBITA of around € 10 m.
HOTELS & RESORTS
C A P A C I T Y 1 in ’000
O C C U P A N C Y R A T E 2 in %
A V E R A G E R E V E N U E P E R B E D 3 in €
2014 / 15
2014 / 15
2014 / 15
2013 / 14
2013 / 14
2013 / 14
H OT E L S TOTA L 4
23,973
82.3
59.10
23,715
80.6
53.95
17,272
85.9
57.13
17,242
84.7
50.53
2,898
72.6
90.67
2,845
74.1
88.93
2,485
67.1
43.57
2,362
58.1
41.44
RIU
ROBINSON
I B E R OT E L
1
Group owned or leased hotel beds multiplied by opening days per annum
Occupied beds dividied by capacity
Arrangement revenue divided by occupied beds
4Adjusted for KPI s of Grecotel; excl. former TUI Travel hotels
2
3
RIU
Riu, one of Spain’s leading hotel chains, operated a total of 104 (prior year: 103) hotels in the period under review. Capacity increased
slightly by 0.2 % year-on-year to 90,187 hotel beds in financial year
2014 / 15. At 85.9 %, average occupancy of Riu hotels rose by 1.2 percentage points year-on-year. Average revenues per bed grew signifi
cantly by 13.1 %.
Riu hotels in the Canaries recorded a year-on-year decline in occupancy of 0.7 percentage points to 92.5 %. The Canaries continued to
benefit from strong demand, which resulted in an above-average
increase in average revenues per bed of 9.7 %.
Riu hotels in the Balearics recorded a year-on-year increase in occupancy of 3.9 percentage points to 82.6 %. Average revenues per bed
grew by 5.5 % on the prior year. In mainland Spain, average occupancy
of Riu hotels matched the prior year’s level at 85.5 %. Average revenues per bed rose by 2.9 % year-on-year.
132
MANAGEMENT REPORT
In the long-haul business, Riu hotels recorded average occupancy of
82.4 %, up by 1.9 percentage points on the high level reported in the
prior year. Riu hotels in Mexico and Jamaica, in particular, continued
to record strong demand from the USA .
ROBINSON
In financial year 2014 / 15, Robinson, market leader in the premium club
holiday segment, operated a total of 24 club facilities with 14,442 beds
in eleven countries, as in the prior year. Capacity declined due to the
sale of three Club resorts in Switzerland and Austria. All three Club
resorts continue to be operated under the Robinson brand as management operations. Robinson Clubs in Morocco, Italy and Portugal
achieved year-on-year growth in occupancy. Clubs in Turkey and the
Maldives fell short of the prior year’s levels. Overall, occupancy for
the Robinson Group was 1.5 percentage points down year-on-year.
Adjusted for the portfolio changes, however, occupancy grew by 0.4
percentage points. Average revenues per bed improved by 2.0 %
year-on-year to € 90.67.
IBEROTEL
In financial year 2014 / 15, as in the prior year, Iberotel had 24 hotels
with a total of 13,406 beds in Egypt, the United Arab Emirates, Turkey, Italy and Germany. Overall occupancy of Iberotels grew yearon-year by 9.0 percentage points to 67.1 %. This positive development was above all driven by closer cooperation with the Group’s
tour operators and a recovery in demand for hotels in Egypt. Hotels
in Turkey posted occupancy of 99.2 %. Average revenues per bed
rose by 5.1 % year-on-year.
OTHER HOTELS
Other hotels primarily comprise the Grupotel Group, located in the
Balearics, and the hotels previously managed in the former TUI
Travel sector.
Cruises
As before, the Cruises segment comprises Hapag-Lloyd Cruises and
the joint venture TUI Cruises.
CRUISES – KEY FIGURES
€ million
Turnover
Underlying EBITA
EBITA
TURNOVER AND E ARNINGS
At € 273.3 m in financial year 2014 / 15 turnover by Hapag-Lloyd
Cruises was down 2.7 % on the prior year result. This was attributable to the decommissioning of Columbus 2 from the fleet in
April 2014. No turnover is carried for TUI Cruises as the joint venture is measured at equity in the consolidated financial statements.
Cruises underlying EBITA increased by € 70.8 m during the financial
year 2014 / 15 to € 80.5 m. Apart from a considerable improvement
2014 / 15
2013 / 14
Var. %
273.3
80.5
80.5
281.0
9.7
24.2
– 2.7
+ 729.9
+ 232.6
in the operating performance of Hapag-Lloyd Cruises, the overall
positive performance by the segment was driven by a fall of around
€ 14 m in financing costs due to the acquisition of Europa 2. TUI
Cruises continued the consolidation of its competitive position and
its extremely effective performance during the period under review
with the successful market launch of Mein Schiff 3 in June 2014 and
Mein Schiff 4 in June 2015.
MANAGEMENT REPORT
133
CRUISES
PA S S E N G E R DAY S
A V E R A G E D A I L Y R A T E S * in €
O C C U P A N C Y in %
2014 / 15
2014 / 15
2014 / 15
2013 / 14
2013 / 14
2013 / 14
348,145
76.2
536
401,027
68.2
450
2,678,464
102.7
173
1,681,281
102.3
171
TUI CRUISES
* Per
day and passenger
In financial year 2014 / 15, Hapag-Lloyd Cruises continued its positive operating performance. Occupancy of its fleet increased by
8.0 percentage points versus the previous year to 76.2 %. The cumulative average daily rate rose considerably by 19.1 % to € 536. Due to
the Hapag-Lloyd fleet focusing on luxury and expedition cruises and
the decommissioning of Columbus 2 from the fleet as per April 2014,
passenger cruise days declined by 13.2 % year-on-year to 348,145
in 2014 / 15.
TUI CRUISES
In financial year 2014 / 15, TUI Cruises recorded a further improvement
in its operating indicators versus the prior year. Occupancy of the
enlarged fleet rose by 0.4 percentage points year-on-year to 102.7 %
(calculated on the basis of two-bed occupancy), reflecting continued
strong demand for our cruise products. This was also documented
by the 1.2 % improvement in the average daily rate per passenger to
€ 173. In financial year 2014 / 15, TUI Cruises recorded a total of
2,678,464 passenger days.
In July 2015, TUI Cruises published further details of its plans to
expand and announced that two more cruise ships had been ordered
in addition to Mein Schiff 5 and Mein Schiff 6. The two newbuilds will
likewise be constructed at the Meyer Turku shipyard in Finland.
They will join the TUI Cruises fleet in 2018 and 2019, further consolidating TUI ’s leadership in the premium segment. It is anticipated
that Mein Schiff 1 and 2 will then be redeployed to Thomson Cruises,
in order to continue with the modernisation of that fleet.
Specialist Travel
Specialist Travel comprises the segments Specialist Group and Hotel
beds Group. These are operated separately from the Tourism business
as they have different business models.
SPECIALIST GROUP
The Specialist Group segment combines the specialist and adventure
tour operators in Europe, North America and Australia.
134
MANAGEMENT REPORT
SPECIALIST GROUP – KEY FIGURES
€ million
Turnover
Underlying EBITA
EBITA
2014 / 15
2013 / 14
Var. %
1,835.1
56.2
38.5
1,625.5
45.5
26.6
+ 12.9
+ 23.5
+ 44.7
In financial year 2014 / 15 turnover by the segment rose by 12.9 % to
€ 1.8 bn. Specialist Group underlying EBITA increased by € 10.7 m in
the financial year 2014 / 15 to € 56.2 m. This included € 8 m favourable foreign exchange impact.
idation of Summer profits from Intrepid in our underlying EBITA
result, however, this is offset by a reduction in minority interest
below underlying EBITA . After adjusting the EBITA for minority
interests, Specialist Group’s result has improved by 18 %.
Underlying performance improved in all divisions. In July 2015 we
announced with the founders of Intrepid Travel that we would end
the PE AK strategic venture, enabling us to focus on our adventure
travel offering more effectively. This has resulted in the non-consol-
HOTELBEDS GROUP
The Hotelbeds Group segment pools the online services and incoming
agencies.
HOTELBEDS GROUP – KEY FIGURES
€ million
Turnover
Underlying EBITA
EBITA
Turnover by the segment rose by 22.7 % to € 1.2 bn in the financial
year 2014 / 15. At € 116.8 m Hotelbeds Group underlying EBITA was
up € 15.1 m for the year, including € 4 m favourable foreign exchange
impact. The bedbank delivered 26 % T T V increase and 18 % roomnight increase, with a strong volume performance in all destinations,
particularly Europe, Asia Pacific and the Middle East and Africa. The
segment currently includes the result of our Inbound Services division, which is being separated and transferred to Tourism during
2015 / 16 by calendar year end 2015 or beginning of 2016.
2014 / 15
2013 / 14
Var. %
1,227.1
116.8
82.3
999.7
101.7
29.1
+ 22.7
+ 14.8
+ 182.8
All other segments
All other segments comprises, in particular, the corporate centre
functions of TUI AG and the intermediate holdings as well as the
Group’s real estate companies.
ALL OTHER SEGMENTS – KEY FIGURES
€ million
Turnover
Underlying EBITA
EBITA
All other segments underlying EBITA cost reduced by € 9.9 m to
€ 100.6 m, including € 2 m favourable foreign exchange impact. This
was driven by the delivery of € 10 m merger-related corporate
streamlining synergies in the year, mainly in relation to headcount
reductions and savings in professional fees.
2014 / 15
2013 / 14
Var. %
85.1
– 100.6
– 140.1
39.3
– 110.5
– 104.4
+ 116.5
+ 9.0
– 34.2
MANAGEMENT REPORT
135
REPORT ON ECONOMIC POSITION
Group net assets
DEVELOPMENT OF THE GROUP’S ASSET STRUCTURE
€ million
Fixed assets
Non-current receivables
Non-current assets
Inventories
Current receivables
Cash and cash equivalents
Assets held for sale
Current assets
Assets
Equity
Liabilities
Equity and liabilities
The Group’s balance sheet total increased by 0.6 % as against
30 September 2014 to € 14.1 bn.
Vertical structural indicators
Non-current assets accounted for 68.2 % of total assets, compared
with 64.2 % in the previous year. The intensity of investments (ratio
of fixed assets to total assets) increased from 59.3 % to 63.2 %.
Current assets accounted for 31.8 % of total assets, compared with
35.8 % in the previous year. The Group’s cash and cash equivalents
30 Sep 2015
30 Sep 2014
Var. %
8,902.7
711.3
9,614.0
134.5
2,623.1
1,672.7
42.2
4,472.5
14,086.5
2,417.3
11,669.2
14,086.5
8,312.4
679.8
8,992.2
126.3
2,474.8
2,258.0
155.9
5,015.0
14,007.2
2,530.2
11,477.0
14,007.2
+ 7.1
+ 4.6
+ 6.9
+ 6.5
+ 6.0
– 25.9
– 72.9
– 10.8
+ 0.6
– 4.5
+ 1.7
+ 0.6
decreased by € 585.3 m year-on-year to € 1,672.7 m. They thus
accounted for 11.9 % of total assets, as against 16.1 % in the
previous year.
Horizontal structural indicators
At the balance sheet date, the ratio of equity to non-current assets
was 25.1 %, as against 28.1 % in the previous year. The ratio of equity to fixed assets was 27.2 % (previous year 30.4 %). The ratio of
equity plus non-current financial liabilities to fixed assets was
105.1 %, compared with 111.9 % in the previous year.
STRUCTURE OF THE GROUP’S NON-CURRENT ASSETS
€ million
Goodwill
Other intangible assets
Investment property
Property, plant and equipment
Companies measured at equity
Financial assets available for sale
Fixed assets
Receivables and assets
Deferred tax claims
Non-current receivables
Non-current assets
30 Sep 2015
30 Sep 2014
Var. %
3,220.4
911.5
7.2
3,629.6
1,077.8
56.2
8,902.7
380.6
330.7
711.3
9,614.0
3,136.2
933.4
7.7
2,836.0
1,336.4
62.7
8,312.4
443.9
235.9
679.8
8,992.2
+ 2.7
– 2.3
– 6.5
+ 28.0
– 19.4
– 10.4
+ 7.1
– 14.3
+ 40.2
+ 4.6
+ 6.9
136
MANAGEMENT REPORT
Development of the Group’s non-current assets
GOODWILL
Goodwill rose by € 84.2 m to € 3,220.4 m. The increase in the carrying amount is essentially due to the translation of goodwill not managed in the TUI Group’s functional currency into euros. In the period
under review, no adjustments were required as a result of impairment tests.
P R O P E R T Y, P L A N T A N D E Q U I P M E N T
Property, plant and equipment increased to € 3,629.6 m in the period under review, primarily driven by the acquisition of cruise ship
Europa 2, previously chartered, and the capitalisation of seven aircraft, partly under finance lease agreements. Property, plant and
equipment also comprised leased assets in which Group companies
held economic ownership. At the balance sheet date, these finance
leases had a carrying amount of € 1,010.0 m, up 82.6 % year-on-year.
D E V E L O P M E N T O F P R O P E R T Y, P L A N T A N D E Q U I P M E N T
€ million
Real estate with hotels
Other land
Aircraft
Ships
Machinery and fixtures
Assets under construction, payments on accounts
Total
30 Sep 2015
30 Sep 2014
Var. %
971.2
163.0
1,166.0
706.7
391.9
230.8
3,629.6
949.7
152.4
635.7
432.8
378.5
286.9
2,836.0
+ 2.3
+ 7.0
+ 83.4
+ 63.3
+ 3.5
– 19.6
+ 28.0
30 Sep 2015
30 Sep 2014
Var. %
134.5
334.9
2,229.7
58.5
2,623.1
1,672.7
42.2
4,472.5
126.3
300.0
2,080.9
93.9
2,474.8
2,258.0
155.9
5,015.0
+ 6.5
+ 11.6
+ 7.2
– 37.7
+ 6.0
– 25.9
– 72.9
– 10.8
C O M PA N I E S M E A S U R E D AT E Q U I T Y
Nineteen associated companies and 33 joint ventures were measured at equity. At € 1,077.8 m, their value decreased by 19.4 % yearon-year as at the balance sheet date.
STRUCTURE OF THE GROUP’S CURRENT ASSETS
€ million
Inventories
Trade accounts receivable and other assets*
Current tax assets
Current receivables
Current assets
* incl. receivables from derivative financial instruments
Development of the Group’s current assets
INVENTORIE S
At € 134.5 m, inventories increased by 6.5 % year-on-year. In the period under review, impairments worth € 0.5 m (previous year none)
were effected on inventories in order to carry them at the lower net
realisable value. As in the previous year, no material reversals of
write-downs on inventories were effected in the year just completed.
F I N A N C I A L A S S E T S AVA I L A B L E F O R S A L E
Financial assets available for sale increased by 11.6 % to € 334.9 m.
As at 30 September 2014, the item current other securities comprised money market fund shares worth € 300.0 m. They represented the issuance proceeds from the high-yield bond issued in connection with the merger and were sold after the completion of the
merger with TUI Travel PLC when the restriction on disposal was
lifted. Current financial assets available for sale comprised the remaining shares in Hapag-Lloyd AG worth € 334.9 m as at 30 September 2015.
C U R R E N T R E C E I VA B L E S
Current receivables comprise trade accounts receivable and other
receivables, effective income tax assets and claims from derivative
financial instruments. At € 2,623.1 m, current receivables increased
by 6.0 % year-on-year.
C A S H A N D C A S H E Q U I VA L E N T S
At € 1,672.7 m, cash and cash equivalents decreased by 25.9 % yearon-year.
MANAGEMENT REPORT
137
Unrecognised assets
In carrying out their business operations, Group companies used
assets of which they were not the economic owner according to the
IASB rules. Most of these assets were aircraft, hotel complexes or
ships for which operating leases, i.e. rental, lease or charter agreements, were concluded under the terms and conditions customary
in the sector.
ASSETS HELD FOR SALE
Assets held for sale decreased by € 113.7 m to € 42.2 m. The decline
is primarily attributable to the reclassification of the stake in
Hapag-Lloyd AG to fiancial assets available for sale.
O P E R AT I N G R E N TA L , L E A S E A N D C H A R T E R C O N T R A C T S
€ million
Aircraft
Hotel complexes
Travel agencies
Administrative buildings
Ships, Yachts and motor boats
Other
Total
Fair value
The fair value of financial liabilities from operating rental, lease and
charter agreements decreased by € 280.6 m to € 3,540.6 m. At 55.8 %,
aircraft accounted for the largest portion, with hotel complexes accounting for 20.6 %.
Further explanations as well as the structure of the remaining terms
of the financial liabilities from operating rental, lease and charter
agreements are provided in the section Other financial liabilities in
30 Sep 2015
30 Sep 2014
Var. %
2,144.7
793.6
263.7
327.5
195.0
118.8
3,843.3
3,540.6
2,036.1
873.3
278.0
371.7
519.3
88.8
4,167.2
3,821.2
+ 5.3
– 9.1
– 5.1
– 11.9
– 62.4
+ 33.8
– 7.8
– 7.3
Information on other intangible, non-recognised assets in terms of
brands, customer and supplier relationships and organisational and
process benefits is provided in the section on The TUI Group; relationships with investors and capital markets are outlined in the section on The TUI Share.
The TUI Group fundamentals see page 80
The TUI share from page 73
138
MANAGEMENT REPORT
Financial position of the Group
Principles and goals of financial management
LIMITING FINANCIAL RISKS
PRINCIPLES
The Group companies operate on a global scale. This gives rise to
financial risks for the TUI Group, mainly from changes in exchange
rates, commodity prices and interest rates.
The TUI Group’s financial management is centrally operated by
TUI AG , which acts as the Group’s internal bank. Financial management covers all Group companies in which TUI AG directly or indirectly holds an interest of more than 50 %. It is based on policies
covering all cash flow-oriented aspects of the Group’s business activities. In the framework of a cross-border division of tasks within
the organisation, TUI AG has outsourced some of the operational
treasury activities to First Choice Holidays Finance Ltd, TUI Travel’s
former treasury company. However, the operational treasury and
financing activities are carried out on a coordinated and centralised
basis.
GOAL S
TUI ’s financial management goals include ensuring sufficient liquidity for TUI AG and its subsidiaries and limiting financial risks from
fluctuations in currencies, commodity prices and interest rates.
LIQUIDIT Y SAFEGUARDS
The Group’s liquidity safeguards consist of two components:
• In the course of the annual Group planning process, TUI draws up
a multi-annual finance budget, and long-term financing and refinancing requirements are derived from this. By drawing on this
information and observing the financial markets to identify refinancing opportunities, decisions can be taken promptly about
entering into appropriate financing instruments for the long-term
funding of the Company.
• TUI uses syndicated and bilateral credit facilities, as well as its
liquid funds to secure sufficient short-term cash reserves.
Through intra-Group cash pooling, the cash surpluses of individual Group companies are used to finance the cash requirements
of other Group companies. Planning of bank transactions is based
on a monthly rolling liquidity planning system.
The key operating financial transaction risks relate to the Euro, USD ,
GBP, and to fuel. They mainly result from cost items in foreign currencies held by individual Group companies, e. g. hotel procurement,
aircraft leasing, aircraft fuel and bunker oil invoices or ship handling
costs.
The Group has entered into derivative hedges in a number of foreign currencies in order to limit its exposure to risks from changes in
exchange rates for the hedged items. Changes in commodity prices
affect the TUI Group, in particular in procuring fuels such as aircraft
fuel and bunker oil. The price risks relating to fuel procurement are
largely hedged with the aid of derivative instruments. Where price
increases can be passed on to customers due to contractual agreements, this is also reflected within the Group’s hedging behaviour. In
order to control risks related to interest rates arising on liquidity
procurement in the international money and capital markets and
investments of liquid funds, the Group uses derivative interest
hedges on a case-by-case basis as part of its interest rate risk management.
The TUI Group does not enter into any contracts or deals in derivative financial instruments for trading or speculative purposes.
More detailed information on hedging and risk management as well
as financial transactions and the scope of such transactions at the
balance sheet date is provided in the Risk Report within the Management Report and the section Financial Instruments in the Notes
See from page 97 and 262
MANAGEMENT REPORT
139
Capital structure
C A P I TA L S T R U C T U R E O F T H E G R O U P
€ million
Non-current assets
Current assets
Assets
Subscribed capital
Reserves including net profit available for distribution
Hybrid capital
Non-controlling interest
Equity
Non-current financial liabilities
Current provisions
Provisions
Non-current liabilities
Current financial liabilities
Financial liabilities
Other non-current financial liabilities
Other current financial liabilities
Other financial liabilities
Debt related to assets held for sale
Liabilities
30 Sep 2015
30 Sep 2014
Var. %
9,614.0
4,472.5
14,086.5
1,499.6
413.8
–
503.9
2,417.3
1,860.8
495.8
2,356.6
1,653.3
233.1
1,886.4
456.1
6,938.6
7,394.7
31.5
14,086.5
8,992.2
5,015.0
14,007.2
732.6
1,392.4
294.8
110.4
2,530.2
1,844.0
503.1
2,347.1
1,748.4
217.2
1,965.6
394.5
6,769.8
7,164.3
–
14,007.2
+ 6.9
– 10.8
+ 0.6
+ 104.7
– 70.3
n. a.
+ 356.4
– 4.5
+ 0.9
– 1.5
+ 0.4
– 5.4
+ 7.3
– 4.0
+ 15.6
+ 2.5
+ 3.2
n. a.
+ 0.6
30 Sep 2015
30 Sep 2014
Var. %
6,387.5
45.3
17.2
4,070.6
28.9
48.7
6,517.1
46.5
18.1
4,278.6
30.5
44.5
– 2.0
– 1.2 *
– 0.9 *
– 4.9
– 1.6 *
+ 4.2 *
C A P I TA L R AT I O S
€ million
Non-current capital
Non-current capital in relation to balance sheet total
%
Equity ratio
%
Equity and non-current financial liabilities
Equity and non-current financial liabilities in relation to balance sheet total
%
Gearing%
* percentage points
Overall, non-current capital decreased by 2.0 % to € 6,387.5 m. In
relation to the balance sheet total it amounts to 45.3 % (previous
year 46.5 %).
The equity ratio was 17.2 % (previous year 18.1 %). Equity and
non-current financial liabilities accounted for 28.9 % (previous year
30.5 %) of the balance sheet total at the cut-off date.
The gearing, i. e. the ratio of average net debt to average equity, moved
to 48.7 % from 44.5 % in the previous year.
140
MANAGEMENT REPORT
EQUITY
COMPOSITION OF EQUITY
€ million
Subscribed capital
Capital reserves
Revenue reserves
Hybrid capital
Equity
In the year under review subscribed capital and the capital reserve
increased mainly due to the contribution in kind in connection with
the merger of TUI AG and TUI Travel PLC . To the contrary revenue
reserves declined by € 4,095.6 m to – € 3,773.9 m. The hybrid bond
included in last year’s equity was redeemed in the year under review. Non-controlling interests accounted for € 503.9 m of equity.
30 Sep 2015
30 Sep 2014
Var. %
1,499.6
4,187.7
– 3,773.9
–
503.9
2,417.3
732.6
1,056.3
336.1
294.8
110.4
2,530.2
+ 104.7
+ 296.4
n. a.
n. a.
+ 356.4
– 4.5
PROVISIONS
Provisions mainly comprised provisions for pension obligations, current and deferred tax provisions and provisions for typical operating
risks classified as current or non-current, depending on expected
occurrence. At the balance sheet date, they accounted for a total of
€ 2,356.6 m and were thus € 9.5 m or 0.4 % up year-on-year.
LIABILITIES
COMPOSITION OF LIABILITIES
€ million
Bonds
Liabilites to banks
Liabilites from finance leases
STRUCTURAL CHANGES IN FINANCIAL LIABILITIES
The Group’s financial liabilities decreased by a total of € 79.2 m to
€ 1,866.4 m. The structure of the financial liabilities changed, in particular, due to the reduction in liabilities from bonds following the
redemption of convertible bonds by TUI AG and TUI Travel in the
completed financial year. On the other hand, liabilities to banks increased, in particular due to the adoption of a ship financing and the
finance lease liabilities resulting from additional aircraft financings.
30 Sep 2015
30 Sep 2014
Var. %
293.7
494.1
982.0
116.6
1,886.4
1,114.1
260.7
500.6
90.2
1,965.6
– 73.6
+ 89.5
+ 96.2
+ 29.3
– 3.6
CONVERSIONS AND REDEMPTIONS UNDER THE
€ 2 17. 8 M C O N V E R T I B L E B O N D O F T U I A G
After € 192.3 m of the € 217.8 m convertible bond of TUI AG had
been converted into new shares in TUI AG in prior years, further
conversions were effected in financial year 2014 / 15 so that the remaining nominal volume of the convertible bond totalled € 2.4 m,
redeemed at its maturity date on 17 November 2014.
CONVERSIONS AND REDEMPTIONS UNDER THE
€ 339.0 M CONVE RTIBLE BOND OF TUI AG
The convertible bond with a nominal value of € 339.0 m issued by
TUI AG on 24 March 2011 was terminated ahead of its maturity date
in the completed financial year and was almost fully converted by
the end of the conversion period on 20 March 2015. The bonds outstanding worth € 2.4 m were redeemed at nominal value plus interest on 7 April 2015.
CONVERSIONS AND REDEMPTIONS OF A £ 40 0.0 M CONVERTIB L E B O N D O F T U I T R AV E L L I M I T E D
The third-party investors’ portion amounting to £ 200.0 m of the
convertible bond worth £ 400.0 m issued by TUI Travel Limited on
22 April 2010 was almost fully converted in financial year 2014 / 15.
In the course of the merger between TUI AG and TUI Travel Limited,
the bondholders were granted a special termination right, which was
subsequently exercised by a large number of bondholders for conversion. The bonds outstanding were cancelled ahead of the mat
urity date by TUI Travel Limited on 3 March 2015. By the end of the
cancellation period on 17 April 2015, all bonds still outstanding were
converted by the bondholders.
A S S U M P T I O N O F A € 2 11 . 0 M S H I P F I N A N C I N G
In January 2015, the TUI Group took ownership of cruise ship Europa 2, replacing a respective charter agreement. The bank loan tak-
MANAGEMENT REPORT
141
en out by the previous owner as a collateralised ship financing was
assumed by TUI as part of the purchase price payment. The bank
loan will fall due in April 2025; at the date of the transfer it amounted to € 211.0 m and it will be repaid in semi-annual instalments over
the term of the loan.
NEW FINANCE LEASES
Acquisitions in the completed financial year included six new Boeing
aircraft (four Boeing 787-8 and two Boeing 738-800), refinanced by
means of finance leases based on sale-and-lease-back agreements.
OVERVIE W OF TUI’S LISTED BONDS
The tables below list the maturities, nominal volumes and annual
interest coupons of the listed bonds. In accordance with IAS 32, the
hybrid bond worth € 300.0 m was not shown under financial liabilities but carried in equity until the redemption decision was taken.
LISTED BONDS
Capital measures
Senior Notes
Convertible bond
Convertible bond
Hybrid bond
Convertible bond TUI Travel PLC
Convertible bond TUI Travel PLC
Issuance
September 2014
November 2009
March 2011
December 2005
October 2009
April 2010
Amount
outstanding
€ million
Interest rate
% p. a.
October 2019
300.0
300.0
November 2014
217.8
–
March 2016
339.0
–
Perpetual
300.0
–
October 2014 GBP 350.0 GBP –
April 2017 GBP 400.0 GBP –
4.500
5.500
2.750
7.353 *
6.000
4.900
Maturity
Amount
initial
€ million
Amounts are stated in € million, respectively GBP million.
* Floating (as of 31 March 2015)
ISSUE OF A € 30 0.0 M BOND BY TUI AG
ADDITIONAL BANK LOANS
In September 2014, TUI AG issued high-yield bonds worth € 300.0 m
maturing on 1 October 2019. With the completion of the merger between TUI AG and TUI Travel PLC , the conditions for transferring
the proceeds from the bond from fiduciary custody to TUI AG were
fulfilled.
Apart from these bonds and the ship financing outlined above, the
Hotels & Resorts segment, in particular, but also other segments
took out separate bank loans, primarily in order to finance investments by these companies.
R E PAY M E N T O F A € 3 0 0 . 0 M H Y B R I D B O N D O F T U I A G
TUI AG redeemed its perpetual subordinated bond (“hybrid bond”)
with a nominal value of € 300.0 m by 30 April 2015. Due to the redemption, the hybrid bond was reclassified from equity to financial
liabilities in March 2015. It was redeemed at nominal value plus accrued interest at the end of April 2015.
More detailed information, in particular on the remaining terms, is
provided under Financial liabilities in the Notes to the consolidated
financial statements.
See Notes, page 252
OTHER FINANCIAL LIABILITIES
Totalling € 7,394.7 m, other financial liabilities were up € 230.4 m respectively 3.2 % on previous year.
142
MANAGEMENT REPORT
Off-balance sheet financial instruments and
key credit facilities
O P E R AT I N G L E A S E S
The development of operating rental, leasing and charter contracts
is presented in the section Net assets in the Management Report.
with the operation of tourism services in order to ensure that Group
companies are able to meet, in particular, the requirements of European oversight and regulatory authorities on the provision of guarantees and warranties. The guarantees granted usually have a term
of 12 to 18 months. The issued guarantees carry bonding fees in the
form of a fixed percentage of the maximum guarantee amount. At
the balance sheet date, the bonding facilities were utilised by an
amount of £ 70.2 m.
See page 135
More detailed explanations and information on the structure of the
remaining terms of the associated financial liabilities are provided in
the section Other financial liabilities in the Notes to the consolidated
financial statements. There were no contingent liabilities related to
special-purpose vehicles.
S Y N D I C AT E D C R E D I T F A C I L I T I E S O F T U I A G A N D
T U I T R AV E L PLC
In September 2014, in preparation for the planned merger between
TUI AG and TUI Travel PLC , TUI AG signed a syndicated credit facility worth € 1.75 bn maturing in June 2018. This credit facility replaced the credit facility of TUI Travel PLC worth £ 1.4 bn at the
completion of the merger between TUI AG and TUI Travel PLC on
11 December 2014. This syndicated credit facility is available for
general corporate financing purposes (in particular in the winter
months). It carries a floating interest rate which is based on the
short-term interest rate level (EURIBOR or LIBOR ) plus a margin.
At the balance sheet date, an amount of € 135.7 m from this credit
facility was used for the issuance of bank guarantees.
B I L AT E R A L B O N D I N G F A C I L I T I E S O F T U I A G W I T H I N S U R A N C E
C O M PA N I E S
In the completed financial year, TUI AG concluded several bilateral
bonding facilities with various insurance companies with a total volume of £ 112.5 m. These bonding facilities are required in connection
Commitments from finance leases
The € 300.0 m bond and the credit and guarantee facilities of TUI AG
comprise a number of obligations.
TUI AG has a duty to comply with certain financial covenants (as
defined in the respective contracts) from its syndicated credit facility worth € 1.75 bn and a number of bilateral bonding facilities requiring (a) compliance with an EBITDAR -to-net interest expense
ratio, measuring the Group’s relative charge from the interest result
and the lease and rental expenses; and (b) compliance with a net
debt-to- EBITDA ratio, calculating the TUI Group’s relative charge
from financial liabilities. The EBITDAR -to-net interest expense ratio
has to have a coverage ratio of at least 1.5 times; net debt must not
exceed 3.0 times EBITDA . The financial covenants are determined
semi-annually. They restrict, inter alia, TUI ’s scope for encumbering
or selling assets, acquiring other companies or shareholdings and
effecting mergers.
The bond worth € 300.0 m and the credit and bonding facilities of
TUI AG also contain additional contractual clauses typical for financing instruments of this type. Non-compliance with these obligations
awards the lenders the right to call in the facilities or terminate the
financing schemes for immediate repayment.
Ratings by Standard & Poor’s and Moody’s
T U I A G R AT I N G S
2010 / 11
2011 / 12
2012 / 13
2013 / 14
2014 / 15
Outlook
Standard & Poor’s
Moody’s
B–
Caa1
B–
B3
B
B3
B+
B2
BB –
stable
positive
In preparation for the merger with TUI Travel PLC , both rating agencies acknowledged the potential synergies to be delivered and the
simplification of the Group structure. In December 2014, Moody’s
upgraded its corporate rating from “B2” to “Ba3”, and Standard &
Poor’s lifted their rating from “B+” to “ BB –”. In August 2015, Moody’s
lifted its outlook to “positive” due to improvements to the operating
performance and a revised credit metrics methodology.
Ba3
The bonds worth € 300.0 m of TUI AG are assigned a “ BB –” rating
by Standard & Poor’s and a “Ba3” rating by Moody’s. The syndicated
credit facility worth € 1.75 bn of TUI AG was assigned a “ BB -” rating
by Standard & Poor’s.
Financial stability targets
TUI considers a stable credit rating to be a prerequisite for the further development of the business. In response to the merger between TUI AG and TUI Travel, Standard & Poor’s and Moody’s both
lifted their TUI ratings. We are seeking further improvements so as
to ensure better access to the debt capital markets even in difficult
macroeconomic situations. The financial stability ratios we have defined are leverage ratio and coverage ratio, based on the following
basic definitions:
Leverage ratio = (gross financial liabilities + fair value of financial
commitments from lease, rental and leasing agreements + pension
provisions and similar obligations) / (reported EBITDA + long-term
leasing and rental expenses)
MANAGEMENT REPORT
143
Quoted credit margins (CDS levels) for corporates in the so-called
high-yield territory rose slightly year-on-year, showing strong fluctuations in some cases. While demand for CDS paper declined overall, quotations were at a very low level for TUI AG . Refinancing options were available against the backdrop of the very receptive
capital market environment.
In September 2014, in preparation for the merger between TUI AG
and TUI Travel PLC , TUI AG issued a five-year bond worth € 300.0 m
and signed a syndicated credit facility worth € 1.75 bn maturing in
June 2018. The assumption of debt from a ship financing worth
€ 211.0 m was effected on the basis of the existing terms and conditions. In the completed financial year, no major new large-volume
financing schemes were taken out apart from collateralised aircraft
financings.
Liquidity analysis
LIQUIDIT Y RESERVE
Coverage ratio = (reported EBITDA + long-term leasing and rental
expenses) / (net interest expenses + ⅓ of long-term leasing and
rental expenses)
These basic definitions are subject to specific adjustments in order
to reflect current circumstances.
For the completed financial year, the leverage ratio was 3.0(x), while
the coverage ratio was 4.7(x). Our business performance reflects
constant improvements in these indicators. We aim to achieve a leverage ratio between 3.50(x) and 2.75(x) and a coverage ratio between 4.50(x) and 5.5.(x) for financial year 2015 / 16. We intend to
adjust these target corridors further in subsequent financial years
to support our goal of improving our credit rating.
In the completed financial year, the TUI Group’s solvency was secured at all times by means of cash inflows from operating activities,
liquid funds, and bilateral and syndicated credit agreements with
banks.
At the balance sheet date, cash and cash equivalents of TUI AG , the
TUI Group’s parent company, totaled € 833.7 m.
RESTRICTIONS ON THE TRANSFER OF LIQUID FUNDS
At the balance sheet date, there were restrictions worth around
€ 0.2 bn on the transfer of liquid funds within the Group that might
significantly impact the Group’s liquidity, such as restrictions on capital movements and restrictions due to credit agreements concluded.
CHANGE OF CONTROL
Interest and financing environment
Throughout the financial year, short-term interest rates have remained at extremely low levels compared with historical rates. Some
central bank deposit rates are now negative, which has had a knockon effect on bank deposit rates. Therefore, yields on the investment
of liquid funds have been impacted, as well as refinancing costs in
case of variable interest rates.
Significant agreements taking effect in the event of a change of control
due to a takeover bid are outlined in the chapter on Information
required under takeover law.
Information required under takeover law see page 157
144
MANAGEMENT REPORT
Cash flow statement
S U M M A R Y C A S H F L O W S TAT E M E N T
2014 / 15
2013 / 14
revised
+ 790.5
– 216.8
– 1,116.7
– 543.0
+ 1,074.5
– 586.3
– 318.8
+ 169.4
€ million
Net cash inflow from operating activities
Net cash outflow from investing activities
Net cash outflow from financing activities
Change in cash and cash equivalents with cash effects
The cash flow statement shows the flow of cash and cash equivalents on the basis of a separate presentation of cash inflows and
outflows from operating, investing and financing activities. The effects
of changes in the group of consolidated companies are eliminated.
N E T C A S H I N F L O W F R O M O P E R AT I N G A C T I V I T I E S
In the financial year under review, the cash inflow from operating
activities amounted to € 790.5 m (previous year € 1,074.5 m). It included interest of € 18.6 m and dividends of € 84.3 m in the reporting period. A cash outflow of € 148.4 m resulted from income tax
payments.
NE T C ASH FLOW FROM INVESTMENT
In the financial year under review, the cash outflow from investing
activities totalled € 216.8 m (previous year € 586.3 m). Payments received, in particular from the sale of the shares in a money market
fund acquired in the prior year and sold after the completion of the
merger between TUI AG and TUI Travel PLC , went hand in hand
with a cash outflow for capital expenditure related to property,
plant and equipment and intangible assets of € 462.1 m for the tour
operators and airlines, € 173.3 m for Hotels & Resorts, € 88.5 m for
the Cruises segment and € 85.3 m for Specialist Travel. The cash
outflows for capital expenditure in property, plant and equipment
and intangible assets and the corresponding cash inflows do not
match the additions and disposals shown in the development of
fixed assets, as these also include the non-cash investments and
disposals.
NE T C A SH OUTFLOW FROM FINANCING AC TIVITIE S
In the period under review, the cash outflow from financing activities rose by € 797.9 m year-on-year to € 1,116.7 m.
Major cash outflows resulted from the repayment of a financing
scheme in connection with a convertible bond of former TUI Travel PLC
(€ 195.3 m), the cancellation and repayment of the hybrid bond of
TUI AG (€ 300.0 m), dividend payments to the hybrid bondholders
and shareholders of TUI AG (€ 109.3 m) and to minority shareholders, primarily former TUI Travel PLC and RIUSA II S.A. (€ 197.0 m)
and interest payments (€ 92.0 m).
CHANGE IN C A SH AND C A SH EQUIVALE NT S
€ million
2014 / 15
2013 / 14
Cash and cash equivalents at the beginning of period
Changes due to changes in exchange rates
Change in cash and cash equivalents due to changes in the group of consolidated companies
Cash changes
Non cash changes
Cash and cash equivalents at the end of period
+ 2,258.0
– 33.1
+ 0.3
– 543.0
–
+ 1,682.2
+ 2,674.0
– 1.7
+ 3.8
+ 169.4
– 587.5
+ 2,258.0
Cash and cash equivalents comprise all liquid funds, i.e. cash in
hand, bank balances and cheques. They declined by 25.9 % year-onyear to € 1,682.2 m. Cash and cash equivalents include an amount of
€ 9.5 m shown under assets held for sale.
The detailed cash flow statement and additional explanations are
provided in the consolidated financial statements and in the section
Notes to the cash flow statement in the Notes to the consolidated
See pages 168 and 252
MANAGEMENT REPORT
145
Analysis of investments
The development of fixed assets, including property, plant and
equipment, intangible assets, shareholdings and other investments,
is presented in the section on Net assets in the Management Report. Additional explanatory information is provided in the Notes to
the consolidated financial statements.
A D D I T I O N S T O P R O P E R T Y, P L A N T A N D E Q U I P M E N T
The table below lists the cash investments in intangible assets and
property, plant and equipment. This indicator does not include financing processes such as the taking out of loans and finance leases.
C APE X BY SEGMENT
€ million
Northern Region
Central Region
Western Region
Hotels & Resorts
Cruises
Other Tourism
Tourism
Specialist Group
Hotelbeds Group
All other segments
TUI Group
Sum of the segments
Investments in other intangible assets and property, plant and
equipment totalled € 594.3 m in the period under review, up 54.1 %
on the prior year.
In the period under review, investments mainly related to the develop
ment and launch of new booking and reservation systems, down
payments on ordered aircraft, and the acquisition of MS Europa 2.
2014 / 15
2013 / 14
Var. %
65.3
23.6
23.6
167.3
86.7
82.5
449.0
35.7
38.4
60.0
583.1
11.2
594.3
70.5
24.9
22.3
133.6
10.4
39.0
300.7
32.7
27.8
12.7
373.9
11.8
385.7
– 7.4
– 5.2
+ 5.8
+ 25.2
+ 733.7
+ 111.5
+ 49.3
+ 9.2
+ 38.1
+ 372.4
+ 56.0
– 5.1
+ 54.1
Essential investments in TUI Hotels & Resorts related in particular
to the construction of hotels in Jamaica, Mauritius and Tuscany. Investments were also effected for the renovation and maintenance of
existing hotel facilities.
The table below shows a reconciliation of investments to additions
to the TUI Group’s other intangible assets and property, plant and
equipment.
R E C O N C I L I AT I O N O F C A P I TA L E X P E N D I T U R E
2014 / 15
2013 / 14
restated
594.3
211.0
477.4
232.1
8.6
1,523.4
385.7
–
161.5
216.5
39.2
802.9
€ million
Capital expenditure
Debt financed investments
Finance leases
Advance payments
Additions to the group of consolidated companies
Additions to other intangible assets, investment property and property, plant and equipment
146
MANAGEMENT REPORT
A M O R T I S AT I O N O F O T H E R I N TA N G I B L E A S S E T S A N D D E P R E C I AT I O N O F P R O P E R T Y, P L A N T A N D E Q U I P M E N T B Y S E C T O R
€ million
Northern Region
Central Region
Western Region
Hotels & Resorts
Cruises
Other Tourism
Tourism
Specialist Group
Hotelbeds Group
All other segments
TUI Group
Sum of the segments
Investment obligations
ORDER COMMITMENTS
Due to agreements concluded in financial year 2014 / 15 or in prior
years, order commitments for investments totalled € 3,927.7 m at
the balance sheet date; this total includes an amount of € 275.1 m for
scheduled deliveries in financial year 2015 / 16.
2014 / 15
2013 / 14
Var. %
103.1
28.3
22.0
113.0
17.1
50.6
334.1
47.5
39.4
75.7
496.7
56.0
552.7
103.8
22.5
23.3
81.2
13.1
24.7
268.6
43.5
34.8
39.5
386.4
11.8
398.2
– 0.7
+ 25.8
– 5.6
+ 39.2
+ 30.5
+ 104.9
+ 24.4
+ 9.2
+ 13.2
+ 91.6
+ 28.5
+ 374.6
+ 38.8
At the balance sheet date, order commitments for aircraft comprised 64 planes (4 B787s and 60 B737s), to be delivered by the end
of financial year 2022 / 23. Delivery of one aircraft has been scheduled for financial year 2015 / 16.
More detailed information is provided in the section Other financial liabilities in
Sustainable development
Commitment to sustainability: Responsibility for
the environment, society and our people.
For the TUI Group, economic, environmental and social sustainability is a fundamental management principle and a cornerstone of our
strategy for continually enhancing the value of our Company. This is
the way we create the conditions for long-term economic success
and assume responsibility for future generations.
In September 2015, the TUI Group presented its new 2020 sustainability strategy. Under the title “Better Holidays, Better World”, the
sustainability efforts of the world’s leading tourism business comprise three major ambitions: “step lightly”, “make a difference” and
“lead the way”.
More detailed information on TUI ’s sustainability strategy at
www.tuigroup.com/BHBW strategy
Our goal is to make a positive contribution to sustainable development in environmental and social respects, both in the host coun-
tries and at our own locations. At the same time, we consistently aim
to avoid or reduce any negative impacts our business operations
might have on our natural and social environment. In order to actively help shape the future of sustainable tourism, TUI aim to extend its investments in youth, tourism skills and education and collaboration with the holiday destinations.
MANAGEMENT REPORT
147
T U I ’ S S U S TA I N A B I L I T Y S T R AT E G Y 2 0 15 – 2 0 2 0
step
lightly
make
a difference
lead
the way
betterholidays
betterworld
TUI sustainability strategy
2015 – 2020
Reducing the environmental impact of
holidays through our own operations
Creating positive change for people
and communities through our value
chain and customers
Pioneering sustainable tourism
influencing the wider industry and
beyond
In its Magazine, the TUI Group provides detailed information about
sustainability targets, activities, milestones and indicators. Current
projects and initiatives are, moreover, regularly published on our
website at www.tui-sustainability.com. TUI Group companies also
offer detailed information about their sustainability activities on
their local websites.
TUI Magazine online at annualreport2014-15.tui-group.com
Details about sustainability in the TUI Group: www.tui-sustainability.com
Since 21 September 2015, TUI AG has once again been listed in the
renowned Dow Jones Sustainability Index Europe, where it is the
only travel group. In this year’s review of the index composition, the
Company achieved particularly high scores in the categories Climate
Strategy and Corporate Citizenship.
TUI AG is also represented in the sustainability indexes F TSE 4Good,
STOX X Global ESG Leaders Index, Ethibel Excellence Index and
ECPI Ethical Index €uro. TUI is featured in the Climate Disclosure
Leadership Index (CDLI ) in the UK and Germany for its approach to
carbon disclosure.
The environment
Respecting the environment in our products, services and processes
is an essential feature of our quality standards. Conserving natural
resources and mitigating negative environmental impacts secure
TUI ’s success. We place priority on carbon reduction, resource efficiency and biodiversity.
G R O U P - W I D E E N V I R O N M E N TA L M O N I T O R I N G
Group-wide processes to monitor environmental performance and
determine meaningful indicators were further pursued in financial
year 2014 / 15. These are based on internationally acknowledged
standards such as the Greenhouse Gas Protocol and the current
Guidelines of the Global Reporting Initiative (GRI ). Group-wide
monitoring focuses on those business activities which most impact
the environment and is actively used to improve environmental performance.
Detailed information about the TUI Group’s environmental footprint will be
found in the accompanying Magazine.
To establish the relevant indicators, our businesses use an internal
system to report their consumption and activities on an annual basis.
The quantitative data is then consolidated at Group level and aggregated into metrics. In the period under review, a web-based system
was used across the board for the first time to further enhance data
quality and increase the efficiency of the data capture process.
148
MANAGEMENT REPORT
FOCUS ON CARBON AND EMISSIONS
Our specific focus is on improving carbon emissions, in particular by
the TUI Group’s airlines, which account for a large proportion of our
CO 2 emissions.
C A R B O N D I O X I D E E M I S S I O N S ( C O2 )
tons
Airlines & Aviation
Hotels & Resorts
Cruises
Major Premises / Shops
Ground Transport
Scope 3 (Other)
Group
In the financial year 2014 / 15, the TUI Group’s total emissions increased slightly year-on-year in absolute terms. This is mainly a result of increased activity in the Airline & Aviation segment.
The increase of 10.8 % in absolute CO 2 emissions from cruise operations mainly resulted from the introduction of TUI Cruises Mein
Schiff 4.
Climate protection measures taken by TUI airlines
TUI airlines have launched more than 30 measures to steadily enhance the efficiency of aircraft and cut emissions. They include ongoing fleet renewal, regularly washing engines and mounting winglets. Aircraft operated by TUI airlines are gradually being fitted with
split scimitar winglets, generating further improvements in aircraft
aerodynamics.
2014 / 15
2013 / 14
Var. %
5,615,386
510,492
639,119
38,115
17,761
68,403
6,889,276
5,520,695
658,568
576,741
35,110
24,974
63,888
6,879,976
+ 1.7
– 22.5
+ 10.8
+ 8.6
– 28.9
+ 7.1
+ 0.1
Reducing the weight of the aircraft in the TUI fleet also helps to cut
fuel consumption and thus reduce carbon emissions. The commissioning of Boeing 787 Dreamliners by Thomson Airways, Arkefly and
Jetairfly has led to cuts in fuel consumption, as these aircraft are
more lightweight and aerodynamic because the airframe is made of
carbon fibre reinforced plastic. The use of lighter equipment, such
as seats and trolleys, also helps to reduce aircraft weight, jet fuel
consumption and hence emissions.
TUI airlines achieved their 2014 target of reducing absolute and specific CO 2 emissions by 9 % versus the 2007 / 08 baseline well ahead
of schedule. In September 2015 TUI Group launched its sustainability strategy, Better Holidays, Better World 2015 – 2020.
We aim to continue to operate Europe’s most carbon-efficient airlines and reduce the carbon intensity of our global operations by
10 % by 2020. We will reduce TUI airlines carbon emissions per passenger km (g CO 2 / RPK ) by 10 % (against the baseline of 2013 / 14).
MANAGEMENT REPORT
149
T U I A I R L I N E S – F U E L C O N S U M P T I O N A N D R E L AT E D E M I S S I O N S
Specific fuel consumption
Carbon dioxide (CO 2) – absolute
Carbon dioxide (CO 2) – specific
Nitrogen oxide ( NO X ) – absolute
Nitrogen oxide ( NO X ) – specific
Carbon monoxide (CO ) – absolute
Carbon monoxide (CO ) – specific
Hydrocarbon (HC ) – absolute
Hydrocarbon (HC ) – specific
l / 100 rpk*
t
kg / 100 rpk*
t
g / 100 rpk*
t
g / 100 rpk*
t
g / 100 rpk*
2014 / 15
2013 / 14
Var. %
2.62
5,034,264
6.60
30,754
41.38
1,523
2.05
130
0.17
2.68
5,014,068
6.76
31,651
44.13
1,440
2.01
131
0.18
– 2.3
+ 0.4
– 2.3
– 2.8
– 6.2
+ 5.8
+ 2.0
– 0.8
– 5.6
* rpk = Revenue Passenger Kilometre
Fuel consumption, relative CO 2 emissions and other emissions declined in 2015 thanks to continued deployment of new technology,
ongoing fleet renewal and highly efficient load factors and flight operations.
TUI AIRLINES – CARBON INTENSITY
TUI Airline fleet
ArkeFly
Corsair International
Jetairfly
Thomson Airways
TUI fly
TUI fly Nordic
g CO 2 / rpk
g CO 2 / rpk
g CO 2 / rpk
g CO 2 / rpk
g CO 2 / rpk
g CO 2 / rpk
g CO 2 / rpk
2014 / 15
2013 / 141
Var. %
g CO 2e / rpk 2
66.0
63.8
79.8
69.6
63.7
63.4
60.6
67.6
69.0
82.3
70.0
64.8
63.8
62.6
– 2.3
– 7.5
– 3.0
– 0.6
– 1.7
– 0.6
– 3.2
66.7
64.4
80.6
70.3
64.3
64.0
61.2
We have requested PwC (the Company’s auditors) to provide assurance on the carbon intensity metrics displayed in the table “ TUI Airlines – Carbon intensity” above.
To read our airline carbon data methodology document and PwC’s Assurance Report in full, please visit www.tuigroup.com/en-en/sustainability/reporting-downloads
1In F Y 2014 / 15 TUI Group adopted the European Standard ( EN 16258-2012) to reflect the methodology used by airlines to comply with the EU ’s Emissions Trading Scheme
requirements. Therefore, TUI has restated previous year’s KPI s using the same methods.
2 rpk = Revenue Passenger Kilometre
To enhance the information content, specific emissions are also
shown in the form of CO 2 equivalents (CO 2e). Apart from carbon
dioxide (CO 2), they include the other five greenhouse gas emissions
that impact the climate as listed in the Kyoto Protocol: methane
(CH 4), nitrous oxide (N2O), hydrofluorocarbons (HFC s), perfluorocarbons (PFC s) and sulphur hexafluoride (SF 6).
150
MANAGEMENT REPORT
Human resources
Changes in headcount
On 30 September 2015, the TUI Group’s worldwide headcount was
76,036, 1.3 % down year-on-year. In the period under review, the
headcount strongly reflected the seasonality of the tourism business,
in particular in hotel companies and incoming agencies. Tourism employed the lion’s share of Group personnel.
PERSONNEL BY SEGMENT
Northern Region
Central Region
Western Region
Hotels & Resorts
Cruises
Other Tourism
Tourism
Specialist Group
Hotelbeds Group
All other segments
TUI Group
Total
30 Sep 2015
30 Sep 2014
restated*
Var. %
14,102
12,247
5,700
24,373
232
1,436
58,090
4,267
12,342
1,071
75,770
266
76,036
14,872
12,045
5,500
23,990
228
1,553
58,188
6,068
11,358
983
76,597
431
77,028
– 5.2
+ 1.7
+ 3.6
+ 1.6
+ 1.8
– 7.5
– 0.2
– 29.7
+ 8.7
+ 9.0
– 1.1
– 38.3
– 1.3
* Previous year’s figures restated to the deconsolidation of two companies
TOURISM
WESTERN REGION
At the end of financial year 2014 / 15, the headcount in Tourism totalled
58,090, almost flat year-on-year. The individual segments recorded
different trends.
Western Region saw an increase in headcount of 3.6 % to 5,700, primarily due to the inclusion of additional entities.
HOTELS & RESORTS
NORTHERN REGION
Northern Region reported a year-on-year decline in headcount of
5.2 % to 14,102. This decrease mainly resulted from the reduction in
sales by retail shops in the UK and lower staffing numbers in the
destinations.
CENTRAL REGION
Central Region recorded a headcount of 12,247, a decline of 1.7 %
year-on-year. The headcount increased in the retail segment in Germany and at TUI Services, while staffing numbers in Austria and in
tour operation in Germany decreased due to ongoing restructuring
programmes.
At the balance sheet date, Hotels & Resorts reported 24,373 employees, up 1.6 % on the prior year. This growth was mainly attributable
to the opening of new hotel resorts and the optimisation of the
hotel portfolio. It was driven, above all, by Riu hotels, the largest
hotel company in the portfolio, reporting an increase of 2.7 % to
10,829 employees. Due to new acquisitions, Robinson also posted an
increase of 7.6 % to 3,385. In financial year 2015 / 16, Hotels & Resorts
will see a substantial rise in headcount due to the growth strategy,
in particular the launch of hotels under the new brand TUI Blue.
CRUISES
The Cruises segment recorded a year-on-year increase in headcount of
1.8 % to 232, driven by the reactivation of dormant work contracts.
MANAGEMENT REPORT
151
S PE C I A L I S T T R AV E L
ALL OTHER SEGMENTS
The Specialist Group reported a decline in headcount of 29.7 % to
4,267, primarily attributable to the sale of Peak Travel. The Hotelbeds
Group recorded an increase of 8.7 % to 12,342 employees year-onyear, mainly due to the creation of new jobs at Intercruises, the provider of cruise handling services.
All other segments recorded an increase in headcount of 9 % to
1,071 year-on-year. In TUI AG , the headcount rose by 18.9 % to 126,
mainly due to the creation of new functions. The headcount growth
in other segments was also driven by the first-time inclusion of TUI
Spain with 103 employees while, on the other hand, restructuring
measures continued in the real estate companies.
GLOBAL HE ADCOUNT
PERSONNEL BY REGION
Germany
Great Britain
Spain
Rest of Europe
North and South America
Other regions
TUI Group
Total
P E R S O N N E L B Y R E G I O N * AS AT 30 SEPT 2015
Rest of Europe
27
12
(26)
(11)
Germany
13
%
Other regions
13
Great Britain
20
(21)
(13)
(15)
Spain
15
(14)
* Excl. employees of the discontinued operations
As a global player, the TUI Group has over 76,000 employees in
57 countries. The number of employees working in Germany increased
by 1.8 % to 10,094. The Group’s headcount in Europe declined by
30 Sep 2015
30 Sep 2014
restated
Var. %
10,094
14,925
11,172
20,170
9,289
10,120
75,770
266
76,036
9,914
15,972
10,556
20,391
8,563
11,201
76,597
431
77,028
+ 1.8
– 6.6
+ 5.8
– 1.1
+ 8.5
– 9.7
– 1.1
– 38.3
– 1.3
0.8 % to 56,361, or 74.4 % of the Group’s overall headcount. Due to a
reduction in the number of employees working in other regions, the
headcount in non-European countries declined by 1.8 % to 19,409,
or 25.6 % of the overall headcount. The year-on-year changes were
driven by staff reductions in the UK and the sale of PE AK Travel.
Mixed leadership
As at 30 September 2015, the balance sheet date, the share of women
as a proportion of the overall headcount grew by around 1 percentage points to 56.2 %. The proportion of women in leadership positions grew slightly by 29.5 % to 31.3 %.
The proportion of women on our German supervisory bodies continued to rise in the period under review. On 30 September 2015,
women accounted for 29.8 % of members, up around 2 percentage
points year-on-year. Within TUI AG , women already made up 30 %
of Supervisory Board members.
In Germany, advantage was taken of the self-commitment mechanism
provided for under the German Stock Corporation Act (AktG) and
the Act on Limited Liability Companies (GmbHG ) to fix specific targets for TUI AG , TUI Deutschland and TUI fly in the period under
review – now we are heading for achieving these targets until
30 June 2017.
152
MANAGEMENT REPORT
P R O P O R T I O N O F W O M E N I N M A N A G E R I A L P O S I T I O N S AS AT 30 SEPT. 2015
TUI AG
TUI DEUTSCHLAND
Executive Board
actual
0%
First management level
below Executive Board
Second management level
below Executive Board
actual
target
actual
target
target
actual
target
actual
target
0 % 20 %
actual
33 % 30 %
target
20 % 30 %
actual
0 % 20 %
At least 1 female*
13 % 20 %
actual
T U I F LY
target
33 % 30 %
target
actual
39 % 40 %
target
46 % 40 %
* Target has been achieved mid of October 2015 with Dr Elke Eller as Group HR / Labour Director
Other staff indicators
AGE STRUC TURE OF GROUP EMPLOYEE S
AV E R A G E C O M PA N Y A F F I L I AT I O N
more than 30 years
up to 20 years
21 – 30 years
29
6
(5)
14
(31)
2
more than
50 years
(2)
(13)
57
31 – 40 years
28
(57)
6
(6)
6 – 10 years
up to
5 years
%
21 – 30 years
%
17
(18)
41 – 50 years
11 – 20 years
23
18
(22)
(17)
(29)
Around two thirds of Group employees were aged between 21 and 40,
with initial signs of demographic change gradually becoming visible.
At Group level, the proportion of employees under 30 declined by
0.6 percentage points to 34.7 %. The proportion of employees in the
medium age bracket between 31 and 50 fell by 0.7 percentage points
to 51 %. The only age bracket reporting growth was the 50+ age
group, with an increase of 1.3 percentage points to 14.3 % of the total
headcount, while in Germany 20.1 % of employees fell into the 50+
age group.
Around 57 % have been with the Company for up to five years. In
Germany the figure for this group is significantly lower at around
33 %. By contrast, around 17.8 % of Group employees have a company affiliation of 11 to 20 years, compared with around 32.5 % of
employees in Germany.
The seasonality of employment structures is also reflected in the
types of employment contract held by our staff. At the balance
sheet date, around 31 % of the Group headcount had temporary
contracts, while in Germany the proportion of staff with temporary
contracts was only around 16 %.
Personnel costs
The compensation package offered by the TUI Group reflects the
appropriateness of compensation and customary market rates. It
varies in its composition, as it is influenced by framework conditions
in different countries and companies. Depending on the function
concerned, a fixed basic salary may go hand in hand with variable com-
MANAGEMENT REPORT
153
ponents. The TUI Group uses these variable factors as incentives to
staff to pursue strategic and long-term corporate objectives. The
key components are designed to honour performance and to enable
employees to participate in the Company’s long-term success. Senior
management have share options and are thus able to benefit directly
when the Company grows in value. TUI also pays social benefits
such as company pensions or specific retirement benefits.
In the period under review, the TUI Group’s personnel costs rose by
11 % to € 2,715.6 m. The year-on-year increase in expenses for wages
and salaries was mainly attributable to foreign exchange effects and,
in particular, expenses incurred in connection with restructuring
measures.
Social security contributions and expenses for pensions and other
benefits declined in the prior year due to income of € 81.0 m from
the change in pension plans carried in the cost of sales. Apart from
that effect and the restructuring expenses incurred in financial year
2014 / 15, the development of the euro exchange rate caused higher
year-on-year expenses due to translation effects.
PERSONNEL COSTS
2014 / 15
2013 / 14
restated
Var. %
2,233.6
482.0
2,715.6
2,083.7
362.5
2,466.2
+ 7.2
+ 33.0
+ 11.0
€ million
Wages and salaries
Social security contributions
Total
PENSION SCHEMES
PA R T-T I M E E A R LY R E T I R E M E N T
The companies in the TUI Group offer their employees benefits
from the company-based pension schemes funded by the employer.
Options for the employees include pension schemes, direct insurance
contracts and individual or direct commitments to build up a private
pension. These schemes were devised so as to take advantage of
fiscal and social security co-sponsorship opportunities. TUI AG
companies also have a statutory obligation to enable their employees
to convert their gross pay into pension contributions. To this end,
TUI AG has concluded advantageous collective contracts with an
established insurance undertaking, and all our German employees
can sign up to these.
In order to further increase the flexibility of their company HR and
succession planning, Group companies in Germany are able to make
use of the opportunities provided under the German Part-Time Early
Retirement Act to shift gradually from employment to retirement.
At the balance sheet date, € 9.4 m was provided through a capital
investment model for the 183 employees working under part-time
early retirement contracts in order to hedge their accrued assets
against employer insolvency.
154
MANAGEMENT REPORT
A N N U A L F I N A N C I A L S TAT E M E N T S
OF TUI AG
Condensed version according to German Commercial Code (HGB )
Earnings position of TUI AG
The annual financial statements of TUI AG were prepared in accordance with the provisions of the German Commercial Code (HGB ), taking account of the complementary provisions of the German Stock
Corporation Act (AktG), and audited by the auditors PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Hanover.
They are published in the electronic federal gazette. The annual financial statements have been made permanently available on the
Internet at www.tuigroup.com and can be requested in print from
TUI AG .
Annual financial statements TUI AG 2014 / 15 online at
www.tuigroup.com/en-en/investors
In the present Annual Report, the Management Report of TUI AG
has been combined with the Management Report of the TUI Group.
I N C O M E S TAT E M E N T O F T U I A G
€ million
Other operating income
Personnel costs
Depreciation
Other operating expenses
Net income from investments
Write-downs of investments
Net interest
Profit on ordinary activities
Taxes
Net profit / loss for the year
The earnings position of TUI AG , the Group’s parent company, is
primarily determined by the appropriation of profits by its Group
companies, either directly associated with TUI AG via profit and loss
transfer agreements or distributing their profits to TUI AG based on
appropriate resolutions.
O T H E R O P E R AT I N G I N C O M E
The increase in other operating income was mainly driven by a signifi
cant year-on-year increase in gains on exchange. This income was
offset by expenses for exchange losses of a similar amount, carried
in other operating expenses. Apart from the increase in gains on
exchange, the increase in other operating income was attributable to
the first-time elimination of intercompany services, carried alongside expenses of almost the same amount rebilled to TUI AG by
other Group companies, shown in other operating expenses. This
item also included intra-Group gains on disposal from shareholdings
and income from the sale of securities held as fixed assets.
2014 / 15
2013 / 14
Var. %
508.8
37.8
0.6
568.6
1,420.0
24.6
– 28.9
1,268.3
11.6
1,256.7
83.1
34.1
0.6
164.0
64.7
5.0
– 61.1
– 117.1
– 7.7
– 109.4
+ 512.3
+ 10.9
–
+ 246.7
n. a.
+ 392.0
+ 52.7
n. a.
n. a.
n. a.
P E R S O N N E L C O S T S A N D O T H E R O P E R AT I N G E X P E N S E S
Personnel costs rose in financial year 2014 / 15, mainly due to the
conclusion of a collective agreement, a slight increase in restructuring
costs and the recruitment of new staff.
Other operating expenses comprise, in particular, the cost of financial
and monetary transactions, charges, fees, services, transfers to impairments and other administrative costs as well as expenses for
exchange losses. Apart from the increase in expenses for exchange
losses mentioned above, other operating expenses also rose due to
the elimination of intercompany services.
NE T INCOME FROM INVESTMENTS
In the financial year under review, net income from investments was
driven, in particular, by the considerable year-on-year increase in
dividend payments by TUI Travel Ltd (previously TUI Travel PLC ).
Moreover, TUI Cruises GmbH distributed profits for the first time in
the completed financial year. Net income from investments also included income from profit transfers from hotel companies and companies allocable to central operations. It also comprised expenses for
loss transfers from Group companies, resulting in a corresponding
reduction in net income from investments. In the period under review,
the transfer of the loss from the impairment of the interests in Hapag-
Lloyd Aktiengesellschaft, to TUI -Hapag Beteiligungs GmbH, had a
particularly negative effect.
MANAGEMENT REPORT
155
in the interest result also resulted from lower interest expenses due
to the redemption and repayment of bonds and bank loans.
TA X E S
In the period under review, taxes related to income taxes and other
taxes. They did not include deferred taxes. In the previous year, taxes
were affected by the reversal of unused tax provisions.
NET PROFIT FOR THE YEAR
WRITE-DOWNS OF INVESTMENTS
In the period under review, write-downs of investments related, in
particular, to interests in TUI Beteiligungs GmbH and write-downs
of hotel investments.
For financial year 2014 / 15, TUI AG posted a net profit for the year
of € 1,256.7 m.
Net assets of TUI AG
I N T E R E S T R E S U LT
Due to the assumption of the internal Group financing function following the merger with TUI Travel PLC , interest income from Group
companies rose in the financial year under review. The improvement
TUI AG ’s net assets and financial position as well as its balance sheet
structure reflect its function as the TUI Group’s parent company.
The balance sheet total rose by 41.9 % to € 7.4 bn in financial year
2014 / 15.
A B B R E V I AT E D B A L A N C E S H E E T O F T U I A G ( F I N A N C I A L S TAT E M E N T A C C O R D I N G T O G E R M A N C O M M E R C I A L C O D E )
€ million
Intangible assets / property, plant and equipment
Investments
Fixed assets
Inventories / Receivables / Trade securities
Current assets
Prepaid expenses
Assets
Equity
Special non-taxed items
Provisions
Bonds
Other liabilities
Liabilities
Deferred income
Liabilities
FIXED ASSETS
At the balance sheet date, fixed assets almost exclusively consisted
of investments. The increase in investments was mainly attributable
to the acquisition of Leibniz Service GmbH and the merger of
TUI AG and TUI Travel PLC . This merger was effected by means of the
acquisition of the minority interests outstanding in TUI Travel PLC
30 Sep 2015
30 Sep 2014
Var. %
13.7
5,662.1
5,675.8
912.7
833.7
1,746.4
0.8
7,423.0
4,995.4
0.5
405.6
300.0
–
1,721.5
2,021.5
–
7,423.0
17.7
4,179.6
4,197.3
662.9
370.2
1,033.1
0.3
5,230.7
2,791.6
0.6
399.3
964.4
194.4
880.3
2,039.1
0.1
5,230.7
– 22.6
+ 35.5
+ 35.2
+ 37.7
+ 125.2
+ 69.0
+ 166.7
+ 41.9
+ 78.9
– 16.7
+ 1.6
– 68.9
n. a.
+ 95.6
– 0.9
n. a.
+ 41.9
by TUI AG . The TUI Travel PLC shareholders with the exception of
TUI AG received 0,399 new shares in TUI AG for each share in
TUI Travel PLC . An opposite effect was caused by the disposal of
shareholdings, a capital decrease, the repayment of TUI Travel’s
convertible bond and impairments of interests in Group companies
and shareholdings.
156
MANAGEMENT REPORT
CURRENT ASSETS
The increase in receivables in financial year 2014 / 15 mainly resulted
from the assumption of the internal Group financing function for
the TUI Travel Group companies in the framework of the merger
between TUI AG and TUI Travel PLC .
Due to the redemption of the money market fund, carried under
current assets in the prior year, cash and cash equivalents increased
in the period under review.
T U I A G ’ S C A P I TA L S T R U C T U R E
EQUITY
TUI AG ’s equity increased by € 2,203.8 m to € 4,995.4 m. The subscribed capital of TUI AG consists of no-par value shares, each rep-
resenting an equal portion in the capital stock. The proportionate
share in the capital stock per share is around € 2.56. At the end of
the financial year under review, the subscribed capital of TUI AG
rose by a total of € 767.0 m to around € 1,499.6 m due to the capital
increase against non-cash contribution in connection with the merger
of TUI AG and TUI Travel PLC , the issue of employee shares and
conversions from the 2009 / 14 and 2011 / 16 convertible bonds and a
convertible bond issued by TUI Travel PLC . At the end of the financial
year under review, subscribed capital comprised 586,603,217 shares.
In financial year 2014 / 15, the capital reserve rose by a total of
€ 274.7 m due to the conversion of bonds into shares and the issue
of employee shares. Revenue reserves exclusively consisted of other
revenue reserves. The Articles of Association do not contain any provisions concerning the formation of reserves. Pursuant to section 58
(2) of the German Stock Corporation Act an amount of € 314.0 m of
the profit of the year were transferred to the revenue reserves.
The profit for the year amounted to € 1,256.7 m. Taking account of the
transfer to other revenue reserves of € 314.0 m and the profit carried
forward of € 66.7 m, net profit available for distribution totalled
€ 1,009.4 m. A proposal will be submitted to the Annual General
Meeting to use the net profit available for distribution for the financial year under review to distribute a dividend of € 0.56 per no-par
value share and to carry the amount of € 680.9 m, remaining after
deduction of the dividend total of € 328.5 m, forward on new account. The equity ratio rose to 67.3 % (previous year 53.4 %).
PROVISIONS
Provisions increased by € 6.3 m to € 405.6 m. They consisted of pension provisions worth € 139.0 m (previous year € 131.7 m) and other
provisions worth € 266.6 m (previous year € 267.6 m).
Other provisions decreased year-on-year, in particular due to the
use of provisions formed in the prior year for outstanding invoices.
Provisions also declined year-on-year due to the reversal of a provision
formed for typical operating risks, the adjustment of insurance tax
and the measurement of hedges on behalf of tourism companies.
The decline was partly offset by additions to the provisions for the
Executive Board members.
LIABILITIES
TUI AG ’s liabilities totalled € 2,021.5 m, a decline of € 17.6 m or 0.9 %.
In September 2014, TUI AG issued an unsecured bond worth
€ 300.0 m maturing on 1 October 2019. Due to the repayment of TUI
Travel’s convertible bond and the conversion of bonds into shares in
TUI AG , liabilities from bonds declined significantly year-on-year.
The increase in other liabilities was also associated with the assumption of the internal Group financing function and mainly reflected an
increase in liabilities to Group companies.
TUI ’s net financial position improved substantially year-on-year,
amounting to a positive position of € 533.7 m in the period under
review.
C A P I TA L A U T H O R I S AT I O N R E S O L U T I O N S
Information on new or existing resolutions concerning capital authorisation, adopted by Annual General Meetings, is provided in the next
chapter on Information Required under Takeover Law.
Information Required under Takeover Law see page 157
MANAGEMENT REPORT
157
I N F O R M AT I O N R E Q U I R E D U N D E R
TA K E O V E R L A W
pursuant to sections 289 (4) and 315 (4) of the German Commercial Code
(HGB ) and explanatory report
Composition of subscribed capital
SHAREHOLDER STRUCTURE
AS AT 30 SEPT 2015
The subscribed capital of TUI AG consists of no-par value shares,
each representing an equal share of the capital stock. The proportionate share in the capital stock per share is around € 2.56.
The subscribed capital of TUI AG , registered in the commercial regis
ters of the district courts of Berlin-Charlottenburg and Hanover,
consisted of 586,603,217 shares at the end of financial year 2014 / 15
(previous year 286,561,143 shares) and totalled € 1,499,627,312. Each
share confers one vote at the Annual General Meeting.
RE STRIC TIONS ON VOTING RIGHTS OR THE TR ANSFER OF
SHARES
The Executive Board of TUI AG is not aware of any restrictions on
voting rights or the transfer of shares.
Riu Hotels S.A.
Institutional
investors
3
78
Private investors
6
Alexey
Mordashov
13
%
EQUIT Y INTE RE ST S E XCE E DING 10 % OF THE VOTING RIGHT S
The Executive Board of TUI AG has been notified of the following
direct or indirect equity interests reaching or exceeding 10 % of the
voting rights:
In a notification pursuant to section 21 (1) of the German Securities
Trading Act (WpHG ), Alexey Mordashov, Russia, notified us that
13.72 % (73,222,346 voting rights) of the voting shares in TUI AG
were attributable to him on 19 December 2014. He also informed us
in a notification pursuant to section 25a (1) of the German Securities
Trading Act that 12.84 % (74,967,030 voting rights) of the voting
shares in TUI AG were attributable to him on 20 March 2015.
At the end of financial year 2014 / 15, around 87 % of the TUI shares
were in free float. Around 6 % of all TUI shares were held by private
shareholders, around 78 % by institutional investors, and around
16 % by strategic investors. According to an analysis of the share
register these were mainly investors from EU countries.
Shares with special control rights
There have not been any shares, nor are there any shares, with
special control rights.
158
MANAGEMENT REPORT
System of voting right control of any employee
share scheme where the control rights are not
exercised directly by the employees
Where TUI AG grants shares to employees under its employee share
programme, the shares are directly transferred to the employees
with a lock-up period. Beneficiaries are free to directly exercise the
control rights to which employee shares entitle them, in just the
same way as other shareholders, in line with legal requirements and
the provisions of the Articles of Association.
Appointment and removal of Executive Board
members and amendments to the Articles of
A ssociation
The appointment and removal of Executive Board members is based
on sections 84 et seq. of the German Stock Corporation Act in combination with section 31 of the German Codetermination Act.
Amendments to the Articles of Association are based on the provisions of sections 179 et seq. of the German Stock Corporation Act in
combination with section 24 of the Articles of Association of TUI AG .
Powers of the Executive Board to issue or buy
back shares
The Annual General Meeting of 10 February 2015 authorised
TUI AG ’s Executive Board to acquire own shares of up to 5 % of the
capital stock existing as at the date of the resolution. The authorisation will expire on 9 August 2016. To date, the option to acquire own
shares has not been exercised.
The Extraordinary General Meeting of 28 October 2014 adopted a
resolution to create authorised capital for the issue of new shares
against non-cash contributions worth € 18.0 m in order to be able to
satisfy TUI Travel share awards granted by TUI Travel to its employees by means of the issue of new shares in TUI AG . The authorisation for this authorised capital will expire on 27 October 2019.
The Annual General Meeting of 13 February 2013 resolved two
authorisations to increase the capital stock by a total of € 74.5 m by
12 February 2018. This includes authorised capital for the issue of
new shares, with the option to exclude the shareholders’ subscription rights, worth € 64.5 m and authorised capital to issue employee
shares worth € 10 m.
Conditional capital of € 120 m was resolved by the Annual General
Meeting of 15 February 2012. Accordingly, bonds with conversion
options or warrants as well as profit-sharing rights and income
bonds of up to a nominal amount of € 1.0 bn may be issued up to
14 February 2017. This authorisation has not yet been exercised.
The Annual General Meeting of 9 February 2011 adopted a resolution to authorise capital for the issue of new shares against cash
contributions worth € 246 m by 8 February 2016.
In the financial year under review, the conditional capital amounting
in each case to € 100 m, resolved in 2008 and 2009, expired with the
conversion and repayment of the bonds worth approximately
€ 218 m and € 339 m issued in 2009 and 2011 on the basis of these
resolutions. The 2014 conditional capital worth around € 62 m, used
in exchange for corresponding subscription rights to TUI Travel PLC
for the issue of TUI shares to the holders of the convertible bonds
issued by TUI Travel PLC in 2010, also served out its purpose.
Significant agreements associated with a change of
control in the Company following a takeover bid
and their consequences
Some of the outstanding financing instruments contain change of
control clauses. A change of control occurs in particular if a third
party directly or indirectly acquires control over at least 50 % or the
majority of the voting shares in TUI AG .
In the event of a change of control, the holders of the fixed-interest
bond with an outstanding volume of € 300.0 m must be offered a
buyback.
For the syndicated credit line worth € 1.75 bn, of which € 135.7 m had
been drawn down at the balance sheet date through the use of bank
guarantees, a right of termination by the lenders has been agreed in
the event of a change of control. A similar right has also been agreed
for several bilateral guarantee lines with a total volume of £ 112.5 m,
concluded with various insurance companies, of which £ 70.2 m had
been drawn down as at the balance sheet date.
Beyond this, there are no agreements in guarantee, leasing, option
or other financial contracts that might cause material early redemption obligations that would be of significant relevance for the
Group’s liquidity.
Apart from the financing instruments mentioned above, a framework agreement between the Riu family and TUI AG includes a
change of control clause. A change of control occurs if a shareholder
group represents a predefined majority of AGM attendees or if one
third of the shareholder representatives on the Supervisory Board
are attributable to a shareholder group. In the event of a change of
control, the Riu family is entitled to acquire at least 20 % and at
most all shares held by TUI in RIUSA II S.A.
A similar agreement concerning a change of control at TUI AG has
been concluded with the El Chiaty Group. Here, too, a change of
control occurs if a shareholder group represents a predefined
majority of AGM attendees or if one third of the shareholder representatives on the Supervisory Board are attributable to a shareholder group. In that case, the El Chiaty Group is entitled to acquire
at least 15 % and at most all shares held by TUI in the joint hotel
companies in Egypt and the United Arab Emirates.
A change of control agreement has also been concluded for the joint
venture TUI Cruises between Royal Caribbean Cruises Ltd and
TUI AG . It gives the other partner the right to demand termination
of the joint venture and to purchase the stake held by TUI AG at a
price which is lower than the selling price of their own stake.
Compensation agreements between the Company
and Executive Board members or employees in the
event of a takeover bid
CHANGE OF CONTROL AGREEMENT
In the event of a loss of Executive Board membership through a
change of control or exercise of the right granted to Board m
embers,
MANAGEMENT REPORT
159
specifically accorded for this event, to resign from office and terminate their service contract as a Board member, a Board member is
entitled to receive remuneration for his or her financial entitlements
for the remaining period of the service contract up to a maximum
period of two or three years, respectively.
The annual management bonus and the entitlements from the longterm incentive programme for the remaining term of the service
contract are based on the average remuneration received in the past
two financial years for Mr Joussen and the average in the past three
financial years for Mr Baier.
REPORT ON
SUBSEQUENT E VENTS
On 6 October 2015, TUI entered a contract for the sale of LateRooms
Ltd. for a consideration of 8.5 GBP (€ 11.6 m). The completion of the
sale took place on 6 October 2015. The transaction does not require
regulatory approval. The LateRooms segment was presented as a
discontinued operation as at 30 September 2015.
On 23 October 2015, TUI and Oscrivia Limited entered contractual
agreements to reorganise the equity of Togebi Holdings Limited. In
particular, a cash capital increase of USD 20 m was agreed, in which
TUI participates with a USD 3 m contribution. Following the completion of the agreements, TUI Group’s stake in Togebi Holdings Limited, within the segment region north, reduces from 49 % to 25 %. At
the same time Oscrivia Limited increases its stake from 51 % to
75 %. Furthermore the joint venture agreement closed in 2009 was
amended to reflect the new voting rights proportions. Due to these
amendments, the relevant activities of Togebi Holdings Limited con-
tinue to be jointly determined by TUI and Oscrivia Limited, so that
Togebi Holdings Limited remains to be classified as a joint venture.
On 6 November 2015 the initial public offering of Hapag-Lloyd AG
occurred. Hapag-Lloyd’s gross issuing proceeds through the placing
of 13,228,677 new shares at an issue price of € 20.00 per HL AG
share amounted to approximately € 265.0 m. Since then, the shares
of Hapag-Lloyd AG are traded in the regulated market (prime standard) of the Frankfurt stock exchange. Due to this capital increase
TUI ’s stake in Hapag-Lloyd AG ’s capital has reduced from 13.9 % to
12.3 %. Had the investment, contrary to the requirements of
IFRS 13, been measured at the issue price of € 20.00 per share at
the balance sheet date, an additional impairment of € 43.7 m had
arisen. For fair value measurements of the investment at future
measurement dates the quoted price of the Hapag-Lloyd share is
relevant as a level 1 input.
Climb the Pico del Teide through its lunar lava landscape
and exotic vegetation. This is authentic Tenerife. TUI offers
guests diverse ways to experience their destination first
hand – not only on the Canary Islands, but all over the world.
» R E A D M O R E A B O U T T U I O N T E N E R I F E I N O U R M A G A Z I N E
U N D E R “ S U I TC A S E I N H A N D ”
CONSOLIDATED
F INANCIAL
STATEMENTS
AND NOTES
CO N T E N T S
162
C ONSOLIDATED FINANCIAL
STATEMENTS
162Income Statement
163Statement of Comprehensive
Income
164 Financial Position
166Statement of Changes in
Group Equity
168 Cash Flow Statement
169 N O T E S
169Principles and Methods underlying
the Consolidated Financial
Statements
201 Segment Reporting
207Notes to the Consolidated Income
Statement
217Notes on the consolidated
statement of financial position
282Notes on the Cash Flow Statement
284Other Notes
303Responsibility statement by
management
304 Independent Auditor’s Report
313 Forward-looking Statements
162
Income Statement
C O N S O L I D AT E D F I N A N C I A L
S TAT E M E N T S
I N C O M E S TAT E M E N T O F T H E T U I G R O U P F O R T H E P E R I O D F R O M 1 O C T O B E R 2 0 14 T O 3 0 S E P T E M B E R 2 0 15
Notes
2014 / 15
2013 / 14
restated
(1)
(2)
20,011.6
17,616.3
2,395.3
1,715.4
51.2
8.0
37.9
370.1
144.5
535.4
87.0
448.4
– 68.8
379.6
340.4
39.2
18,536.8
16,300.8
2,236.0
1,533.8
35.9
2.1
36.8
300.9
26.8
498.7
212.5
286.2
– 15.4
270.8
90.4
180.4
Notes
2014 / 15
2013 / 14
restated
Basic earnings per share
from continuing operations
from discontinued operation
(12)
0.64
0.77
– 0.13
0.26
0.29
– 0.03
Diluted earnings per share
from continuing operations
from discontinued operation
(12)
0.63
0.76
– 0.13
0.26
0.29
– 0.03
€ million
Turnover
Cost of sales
Gross profit
Other income
Other expenses
Financial income
Financial expenses
Earnings before income taxes *
Income taxes
Group profit for the year attributable to shareholders of TUI AG
Group profit for the year attributable to non-controlling interest
(2)
(3)
(3)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
* T he financial performance indicators EBITA and underlying EBITA of the TUI Group, formerly reconciled on the
face of the income statement of the TUI Group, are outlined in the segment reporting within the Group notes now.
EARNINGS PER SHARE
€
Statement of Comprehensive Income
S TAT E M E N T O F C O M P R E H E N S I V E I N C O M E O F T U I G R O U P F O R T H E P E R I O D F R O M 1 O C T O B E R 2 0 14 T O
3 0 S E P T E M B E R 2 0 15
Notes
2014 / 15
2013 / 14
restated
379.6
82.2
0.1
– 24.2
58.1
– 221.7
– 220.2
– 1.5
–
7.1
– 7.1
– 221.0
360.1
– 581.1
22.0
21.6
0.4
27.1
– 393.6
– 335.5
44.1
9.5
34.6
270.8
– 286.0
– 2.5
70.4
– 218.1
– 115.1
– 111.5
– 3.6
– 0.9
– 0.9
–
119.1
– 30.8
149.9
16.8
18.5
– 1.7
– 20.8
– 0.9
– 219.0
51.8
4.6
47.2
82.0
– 72.5
11.5
– 6.9
€ million
Group profit
Remeasurements of pension provisions and related fund assets
Changes in the measurement of companies measured at equity
Income tax related to items that will not be reclassified
Items that will not be reclassified to profit or loss
Foreign exchange differences
Reclassification / adjustments
Financial instruments available for sale
Changes in the fair value
Cash flow hedges
Changes in the fair value
Changes in the measurement outside profit or loss
Income tax related to items that may be reclassified
Items that may be reclassified to profit or loss
Other comprehensive income
Total comprehensive income
attributable to shareholders of TUI AG
attributable to non-controlling interest
Allocation of share of shareholders of TUI AG of total
comprehensive income:
Continuing operations
(13)
(13)
163
164
Financial Position
F I N A N C I A L P O S I T I O N O F T H E T U I G R O U P A S AT 3 0 S E P 2 0 15
Notes
30 Sep 2015
30 Sep 2014
restated
1 Oct 2013
restated
(14)
(15)
(16)
(17)
(18)
(19)
(20)
(21)
(22)
3,220.4
911.5
7.2
3,629.6
1,077.8
56.2
332.5
48.1
330.7
9,614.0
3,136.2
933.4
7.7
2,836.0
1,336.4
62.7
368.1
75.8
235.9
8,992.2
2,976.4
866.0
58.0
2,681.4
1,390.2
71.4
342.8
37.9
223.1
8,647.2
(23)
(19)
(20)
(21)
(22)
(24)
(25)
134.5
334.9
1,948.7
281.0
58.5
1,672.7
42.2
4,472.5
14,086.5
126.3
300.0
1,911.2
169.7
93.9
2,258.0
155.9
5,015.0
14,007.2
115.1
–
1,872.6
49.1
53.7
2,674.0
11.6
4,776.1
13,423.3
€ million
Assets
Goodwill
Investment property
Investments in joint ventures and associates
Trade receivables and other assets
Derivative financial instruments
Deferred tax assets
Non-current assets
Inventories
Current tax assets
Current assets
Financial Position
F I N A N C I A L P O S I T I O N O F T H E T U I G R O U P A S AT 3 0 S E P 2 0 15
Notes
30 Sep 2015
30 Sep 2014
restated
1 Oct 2013
restated
Subscribed capital
Capital reserves
Revenue reserves
Hybrid capital
Equity before non-controlling interest
Equity
(26)
(27)
(28)
(30)
1,499.6
4,187.7
– 3,773.9
–
1,913.4
503.9
2,417.3
732.6
1,056.3
336.1
294.8
2,419.8
110.4
2,530.2
645.2
957.7
116.3
294.8
2,014.0
– 20.3
1,993.7
Pension provisions and similar obligations
Other provisions
Non-current provisions
Current tax liabilities
Deferred tax liabilities
Other liabilities
Non-current provisions and liabilities
(32)
(33)
1,114.5
746.3
1,860.8
1,653.3
78.5
115.7
125.7
136.2
2,109.4
3,970.2
1,242.4
601.6
1,844.0
1,748.4
20.7
98.5
144.8
130.5
2,142.9
3,986.9
1,102.2
575.0
1,677.2
1,834.1
30.6
107.8
107.8
93.6
2,173.9
3,851.1
Pension provisions and similar obligations
Other provisions
Current provisions
Trade payables
Other liabilities
Current liabilities
Liabilities related to assets held for sale
Current provisions and liabilities
(32)
(33)
32.4
463.4
495.8
233.1
3,224.2
388.2
78.9
3,247.3
7,171.7
31.5
7,699.0
14,086.5
32.1
471.0
503.1
217.2
3,292.1
241.9
101.2
3,134.6
6,987.0
–
7,490.1
14,007.2
33.8
447.5
481.3
937.3
3,041.9
177.3
132.5
2,808.2
7,097.2
–
7,578.5
13,423.3
€ million
(31)
(34)
(36)
(37)
(37)
(38)
(34)
(35)
(36)
(37)
(38)
(39)
165
166
S TAT E M E N T O F C H A N G E S I N G R O U P E Q U I T Y O F T H E T U I G R O U P F O R T H E P E R I O D F R O M 1 O C T O B E R 2 0 14 T O 3 0 S E P T E M B E R 2 0 15
€ million
Adoption of IFRS 10 and IFRS 11
Balance as at 1 October 2013 (restated)
Dividends
Hybrid capital dividend
Share based payment schemes of TUI Travel PLC
Conversion of convertible bonds
Issue of employee shares
First-time consolidation
Deconsolidation
Written option on non controlling interests
Effects on the acquisition of non-controlling interests
Effects on the transfer to non-controlling interests
Financial instruments available for sale
Cash flow hedges
Taxes attributable to other comprehensive income
Balance as at 30 September 2014 (restated)
Dividends
Hybrid capital dividend
Share based payment schemes of TUI Travel PLC
Conversion of convertible bonds
Issue of employee shares
Capital increase
Deconsolidation
Effects on the acquisition of non-controlling interests
Redemption hybrid capital
Cash flow hedges
Taxes attributable to other comprehensive income
Balance as at 30 September 2015
Subscribed
capital
(26)
Capital
reserves
(27)
Other revenue
reserves
Foreign
exchange
differences
Financial
instruments
available for sale
645.2
–
645.2
–
–
–
87.1
0.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
732.6
–
–
–
146.1
0.3
620.6
–
–
–
–
–
–
–
–
–
–
–
1,499.6
957.7
–
957.7
–
–
–
97.9
0.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,056.3
–
–
–
453.4
1.2
2,676.8
–
–
–
–
–
–
–
–
–
–
–
4,187.7
897.0
– 2.6
894.4
– 37.8
– 23.2
17.3
271.9
–
–
–
– 2.6
– 22.7
14.0
90.4
– 33.4
–
–
– 177.4
13.6
45.1
– 152.1
– 61.7
1,049.6
– 94.5
– 10.9
24.2
–
–
–
–
– 3,776.3
– 5.2
340.4
– 67.7
–
82.1
22.1
– 24.2
12.3
352.7
– 2,460.4
– 753.0
– 0.6
– 753.6
–
–
–
–
–
–
–
–
–
– 1.8
–
14.4
–
–
–
–
–
14.4
14.4
– 741.0
–
–
–
–
–
–
–
– 260.2
–
–
– 128.0
–
–
–
–
– 128.0
– 128.0
– 1,129.2
0.5
–
0.5
–
–
–
–
–
–
–
–
–
–
–
–
– 0.5
–
–
–
–
– 0.5
– 0.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Cash flow
hedges
Revaluation
reserve
Revenue
reserves
(28)
Hybrid capital
(30)
– 47.5
0.8
– 46.7
–
–
–
–
–
–
–
–
–
0.1
–
– 3.2
–
69.3
–
–
– 12.5
53.6
53.6
7.0
–
–
–
–
–
–
–
3.2
–
–
– 12.8
– 231.0
–
–
29.5
– 214.3
– 214.3
– 204.1
21.7
–
21.7
–
–
–
–
–
–
–
–
–
–
–
– 1.2
–
–
–
–
–
– 1.2
– 1.2
20.5
–
–
–
–
–
–
–
0.2
–
–
– 0.9
–
–
–
–
– 0.9
– 0.9
19.8
118.7
– 2.4
116.3
– 37.8
– 23.2
17.3
271.9
–
–
–
– 2.6
– 22.7
12.3
90.4
– 23.4
– 0.5
69.3
– 177.4
13.6
32.6
– 85.8
4.6
336.1
– 94.5
– 10.9
24.2
–
–
–
–
– 4,033.1
– 5.2
340.4
– 209.4
– 231.0
82.1
22.1
5.3
– 330.9
9.5
– 3,773.9
294.8
–
294.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
294.8
–
–
–
–
–
–
–
–
– 294.8
–
–
–
–
–
–
–
–
–
Equity before
non-controlling
interest
2,016.4
– 2.4
2,014.0
– 37.8
– 23.2
17.3
456.9
1.0
–
–
– 2.6
– 22.7
12.3
90.4
– 23.4
– 0.5
69.3
– 177.4
13.6
32.6
– 85.8
4.6
2,419.8
– 94.5
– 10.9
24.2
599.5
1.5
3,297.4
–
– 4,033.1
– 300.0
340.4
– 209.4
– 231.0
82.1
22.1
5.3
– 330.9
9.5
1,913.4
Non-controlling
interest
(31)
Total
– 19.6
– 0.7
– 20.3
– 91.2
–
14.2
193.8
–
1.6
– 1.8
– 2.1
– 18.7
– 12.3
180.4
– 91.7
– 0.4
49.8
– 108.6
0.7
17.0
– 133.2
47.2
110.4
– 197.1
–
1.9
–
–
–
– 9.5
563.6
–
39.2
– 12.3
10.0
0.1
–
– 2.4
– 4.6
34.6
503.9
1,996.8
– 3.1
1,993.7
– 129.0
– 23.2
31.5
650.7
1.0
1.6
– 1.8
– 4.7
– 41.4
–
270.8
– 115.1
– 0.9
119.1
– 286.0
14.3
49.6
– 219.0
51.8
2,530.2
– 291.6
– 10.9
26.1
599.5
1.5
3,297.4
– 9.5
– 3,469.5
– 300.0
379.6
– 221.7
– 221.0
82.2
22.1
2.9
– 335.5
44.1
2,417.3
167
168
Cash Flow Statement
C A S H F L O W S TAT E M E N T
Notes
2014 / 15
2013 / 14
restated
Var.
(46)
379.6
700.5
– 118.7
207.7
81.3
– 23.3
– 6.1
– 233.6
– 85.3
– 111.6
790.5
270.8
398.7
6.1
254.0
38.2
– 30.4
9.2
– 34.2
– 215.0
377.1
1,074.5
108.8
301.8
– 124.8
– 46.3
43.1
7.1
– 15.3
– 199.4
129.7
– 488.7
– 284.0
341.6
334.3
7.3
– 27.6
325.5
13.5
39.4
– 41.1
286.1
– 826.4
– 601.2
– 225.2
– 5.1
– 24.8
– 216.8
– 9.8
– 128.2
– 24.1
– 348.2
– 586.3
– 7.0
– 50.6
19.0
323.4
369.5
– 2.8
– 77.6
– 109.3
– 197.0
– 60.9
– 108.2
– 48.4
– 88.8
79.3
– 300.0
– 359.7
– 92.0
– 1,116.7
– 543.0
309.7
–
– 263.9
– 137.9
– 318.8
169.4
– 230.4
– 300.0
– 95.8
45.9
– 797.9
– 712.4
2,258.0
– 33.1
2,674.0
– 1.7
– 416.0
– 31.4
0.3
– 543.0
–
1,682.2
3.8
169.4
– 587.5
2,258.0
– 3.5
– 712.4
587.5
– 575.8
9.5
–
9.5
€ million
Group profit
Depreciation, amortisation and impairments (+) / write-backs (–)
Other non-cash expenses (+) / income (–)
Interest expenses
Dividends from joint ventures and associates
Profit (–) / loss (+) from disposals of non-current assets
Increase (–) / decrease (+) in inventories
Increase (–) / decrease (+) in receivables and other assets
Increase (+) / decrease (–) in provisions
Increase (+) / decrease (–) in liabilities (excl. financial liabilities)
Cash inflow from operating activities
Payments received from disposals of property, plant and equipment,
investment property and intangible assets
Payments from disposals of consolidated companies
(excl. disposals of cash and cash equivalents due to divestments)
Payments received from the disposals of other non-current assets
Payments made for investments in property, plant and equipment,
investment property and intangible assets
Payments made for investments in consolidated companies
(excl. cash and cash equivalent received due to acquisitions)
Payments made for investments in other non-current assets
Cash outflow from investing activities
Payments received from and made for capital increases
Payments made for interest increase in consolidated companies
Dividend payments
(47)
TUI AG
subsidiaries to non-controlling interest
Payments received from the issue of bonds and the raising
of financial liabilities
Payments made for redemption of hybrid capital
Payments made for redemption of loans and financial liabilities
Interest paid
Cash outflow from financing activities
Net change in cash and cash equivalents
Development of cash and cash equivalents
Cash and cash equivalents at beginning of period
Change in cash and cash equivalents due to exchange rate fluctuations
Change in cash and cash equivalents due to changes in the group of
consolidated companies
Change in cash and cash equivalents with cash effects
Change in cash and cash equivalents without cash effects
Cash and cash equivalents at end of period
of which included in the balance sheet as assets held for sale
(48)
(49)
Principles and Methods underlying the Consolidated Financial Statements
NOTE S
Principles and Methods underlying the
Consolidated Financial Statements
General
The TUI Group with its major subsidiaries and shareholdings operates in tourism.
TUI AG , based in Karl-Wiechert-Allee 4, Hanover is the TUI Group’s parent company and a listed corporation
under German law. The Company is registered in the commercial registers of the district courts of Berlin-Charlottenburg (HRB 321) and Hanover (HRB 6580). The shares in the company are traded on the London Stock Exchange and the Hanover and Frankfurt Stock Exchanges.
These consolidated financial statements of TUI AG were prepared for the business year from 1 October 2014 to
30 September 2015. Where any of TUI ’s subsidiaries have deviating financial years, financial statements were
prepared as at 30 September in order to include these subsidiaries in TUI AG ’s consolidated financial statements.
The members of the Executive Board and the Supervisory Board are listed in the section on “Corporate Governance” in the Management Report, along with details of other board positions held.
The Executive Board and the Supervisory Board have submitted a Declaration of Compliance with the German
Corporate Governance Code required pursuant to section 161 of the German Stock Corporation Act (AktG) and
made it permanently available to the general public on the Company’s website (www.tuigroup.com).
The consolidated financial statements are prepared in euros. Unless stated otherwise, all amounts are indicated
in million euros (€m).
The consolidated financial statements were approved for publication by TUI AG ’s Executive Board on 8 December 2015.
Accounting principles
D E C L A R AT I O N O F C O M P L I A N C E
Pursuant to Regulation EEC No. 1606 / 2002 of the European Parliament and Council, TUI AG ’s consolidated financial statements as at 30 September 2015 were prepared in accordance with the International Financial Reporting
Standards (IFRS ) as applicable in the European Union. Moreover, the commercial-law provisions listed in section
315a (1) of the German Commercial Code (HGB ) and the Disclosure and Transparency Rules of the UK Financial
Conduct Authority were also observed in preparing the consolidated financial statements.
The accounting and measurement methods and the explanatory information and Notes to these annual financial
statements for financial year 2014 / 15 are consistent in every respect with those followed in preparing the previous consolidated financial statements for financial year 2013 / 14 with the exceptions of standards and interpretations applicable from 1 October 2014 for the first time.
NOTES
169
170
NOTES
NEW SEGMENT STRUCTURE
Due to the merger with TUI Travel PLC , the TUI Group has changed its organisational structure. In line with
IFRS 8, the previously used reporting structure was adjusted as at 31 March 2015 to reflect the management
structure of the TUI Group. The new segment structure is presented and explained in the segment reporting
within this report.
N E W LY A P P L I E D S TA N D A R D S
The following standards and interpretations revised or newly issued by the IASB have been mandatory since the
beginning of financial year 2014 / 15:
•
•
•
•
•
•
•
•
•
IFRS 10: Consolidated Financial Statements
IFRS 11: Joint Arrangements
IFRS 12: Disclosure of Interests in Other Entities
Amendments to IFRS 10, IFRS 11 and IFRS 12: Transition Guidance
Amendments to IFRS 10, IFRS 12 and IAS 27: Investment Entities
Amendments to IAS 27: Separate Financial Statements
Amendments to IAS 28: Investments in Associates and Joint Ventures
Amendments to IAS 32: Financial Instruments – Presentation: Offsetting Financial Assets and Financial Liabilities
IFRIC 21: Levies
In addition, the following standards amended by the IASB and endorsed by the European Union were early adopted
as of the beginning of financial year 2014 / 15:
• Annual Improvements Project (2010 – 2012)
• Annual Improvements Project (2011 – 2013)
• Amendments to IAS 19: Employee Benefits – Defined Benefit Plans: Employee Contributions
Due to the first-time adoption of IFRS 10 and IFRS 11, including the transition guidance and the amendments to
IAS 28, the prior-year numbers were restated. The restatements are summarised in the section on “Restatement
of prior reporting period”. The other announcements had no significant impact on the presentation of the TUI
Group’s net assets, financial position and results of operations.
I F R S 1 0 : C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
IFRS 10 supersedes the provisions of IAS 27 “Consolidated Financial Statements and Accounting for Investments in
Subsidiaries”, relevant for consolidated financial statements, and SIC-12 “Consolidation – Special Purpose Entities”
with a uniform model to consolidate entities based on the concept of control of a parent company over a subsidiary.
According to IFRS 10, control requires power over the relevant activities of an investee, exposure to variable returns
and the ability to affect those variable returns through power over an investee. Upon the first-time adoption of
the standard, two companies transitioned from full consolidation to the equity method as the other shareholders
have a right to co-determine the definition and exercise of the relevant activities via management or supervisory
bodies. The reallocation does not have a material effect on the TUI Group.
I F R S 11 : J O I N T A R R A N G E M E N T S
IFRS 11 supersedes SIC-13 “Jointly Controlled Entities – Non-Monetary Contributions by Venturers” and the previous
IAS 31 “Interests in Joint Ventures”. The standard governs the classification and accounting for joint operations
and joint ventures. The classification as a joint arrangement is effected based on subsidiarity in relation to control
under IFRS 10. In the event of a joint arrangement, further classification as either a joint operation or a joint
venture depends on the rights and obligations of the partners. Accounting for jointly controlled assets is subject
to the rules for joint operations, which continue to be recognised on a proportionate basis. By contrast, proportionate consolidation, which was admissible in the past, will no longer apply to joint ventures under IFRS 11; they must
now be consolidated on the basis of the equity method alone. Application of IFRS 11 does not have a material
effect on the consolidated financial statements. Upon the first-time adoption of the standard, three companies
have been reallocated to joint ventures. One of the companies had already been accounted for using the equity
method. The elimination of proportionate consolidation for joint ventures does not have an impact on the TUI
Group as joint ventures have already been included in the TUI Group’s consolidated financial statements using the
equity method.
I F R S 12 : D I S C L O S U R E O F I N T E R E S T S I N O T H E R E N T I T I E S
This new standard pools the disclosure requirements regarding an entity’s interests in subsidiaries, associates,
joint arrangements and unconsolidated structured entities. Some of the disclosures required under IFRS 12 go
far beyond previous disclosure requirements. In particular, the type of interest, the risks associated with the
interest and their impact on the Group’s net assets, financial position and results of operations must be made
evident. First-time application of IFRS 12 leads to extended disclosure requirements.
T R A N S I T I O N G U I D A N C E F O R I F R S 1 0 , I F R S 11 A N D I F R S 12
The transition guidance published in June 2012 includes relief for first-time adopters of the new standards.
Restated comparative information now only has to be provided for the immediately preceding comparative period.
The requirement to disclose comparative information for unconsolidated structured entities for periods prior to
first-time application of IFRS 12 has been removed.
A M E N D M E N T S T O I F R S 1 0 , I F R S 12 A N D I A S 2 7 : I N V E S T M E N T E N T I T I E S
The amendments, issued in October 2012, free many investment entities from the future requirement to consolidate
the subsidiaries in their consolidated financial statements. Instead, they measure the interests held for investing at
fair value. Moreover, new disclosure requirements have been introduced for investment entities. These amendments
are of no relevance to TUI Group.
A M E N D M E N T S T O I A S 2 7 : S E PA R AT E F I N A N C I A L S TAT E M E N T S
The amendments to IAS 27 exclusively govern the accounting for investments in subsidiaries, associates and joint
ventures and the related notes in the shareholder’s separate financial statements. The previous consolidation
rules are now part of the newly published IFRS 10. The amendments are of no relevance to TUI Group as TUI AG
does not prepare IFRS -based separate financial statements according to section 325 (2a) of the German
Commercial Code.
A M E N D M E N T S T O I A S 2 8 : I N V E S T M E N T S I N A S S O C I AT E S A N D J O I N T V E N T U R E S
The amendments to IAS 28 were issued in June 2011 and require application of the equity method in accounting
for investments in associates and joint ventures. This is in line with the TUI Group’s accounting method used to
date. The amendment also requires that in the event of a partial sale only the part intended to be sold may be
shown as held for sale. Accounting for the remaining part has to be based on the equity method until the date
when the investment ceases to be an associate. First-time application of these amendments leads to changes in
the accounting for the investment in container shipping line Hapag-Lloyd AG since, as a result, only a 30 % stake
of the investment met the “held for sale” criterion retrospectively for financial year 2013 / 14.
A M E N D M E N T S T O I A S 3 2 : F I N A N C I A L I N S T R U M E N T S – P R E S E N TAT I O N
The amendments to IAS 32, issued in December 2011, specify that financial assets and financial liabilities should
be offset in the statement of financial position when, and only when, the entity’s current right to set-off is not
contingent on a future event and is legally enforceable in the normal course of business but also in the event of
default, insolvency or bankruptcy of a counterparty. They also clarify that a gross settlement system is equivalent to
net settlement if it has features that eliminate credit and liquidity risk and process receivables and payables in a
single settlement process. The amendments do not have a material effect on the presentation of the consolidated
I F R I C 21: L E V I E S
This interpretation, issued by IFRIC in May 2013, sets out how and when to recognise a liability for a levy imposed
by a government other than income taxes under IAS 12. It clarifies that an obligation to pay a levy is to be recognised
as soon as the obligating event that triggers the payment of the levy occurs. The interpretation does not have a
material effect on the TUI Group’s financial statements.
NOTES
171
172
NOTES
A M E N D M E N T S T O I A S 19 : D E F I N E D B E N E F I T P L A N S – E M P L O Y E E C O N T R I B U T I O N S
These amendments, published in November 2013, make it clear that contributions paid by employees (or third
parties) themselves for defined benefit pension plans and not linked to the length of service may be recognised as
a reduction in the service cost in the period in which the related service was rendered. They include, for instance,
contributions determined as a fixed percentage of the annual remuneration. The amendment does not have a
material impact on TUI Group’s consolidated financial statements.
A N N U A L I M P R O V E M E N T S P R O J E C T 2 0 1 0 – 2 0 12
Improvements from the Annual Improvements Project were published in December 2013. They contain amendments
to the following seven standards: IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 38 and IAS 24. The amendments
are largely clarifications of the presentation, recognition and measurement requirements within the standards.
The amendments do not have a material effect on the presentation of the financial statements.
A N N U A L I M P R O V E M E N T S P R O J E C T 2 0 11 – 2 0 13
Improvements from the Annual Improvements Project were published in December 2013. They contain amendments
to four standards including IFRS 3, IFRS 13 and IAS 40. The amendments are largely clarifications of the presen
tation, recognition and measurement requirements within the standards. The amendments do not impact TUI
Group’s consolidated the financial statements.
S TA N D A R D S A N D I N T E R P R E TAT I O N S N O T Y E T E F F E C T I V E
The following table provides an overview of the new standards and amendments to existing standards, which do
not have to be applied by the TUI Group for the current financial statements.
S U M M A R Y O F N E W S TA N D A R D S N O T Y E T A P P L I E D /A P P L I C A B L E
Standard /
Interpretation
Standard
IA S 16 & IA S 41
IFRS 11
Agriculture: Bearer Plants
Joint Arrangements: Accounting for Acquisitions of Interests
in Joint Operations
IA S 16 & IA S 38
Clarification of Acceptable Methods of Depreciation and
Amortisation
IA S 1
Presentation of Financial Statements: Disclosure Intitiative
IA S 27
Separate Financial Statements: Equity Method in Separate
Financial Statements
IA S 28 &
Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture
IFRS 10
IAS 28, IFRS 10 & Investment Entities applying the Consolidation Exception
IFRS 12
various
Annual Improvements Project (2012 – 2014)
IFRS 9
Financial Instruments
IFRS 15
Revenue from Contracts with Customers
Applicable
for financial
years from
Endorsement by the
EU commission
1.1.2016
Yes
1.1.2016
Yes
1.1.2016
1.1.2016
Yes
No
1.1.2016
No
1.1.2016
No
1.1.2016
1.1.2016
1.1.2018
1.1.2018
No
No
No
No
TUI Group does not generally intend to voluntarily apply these standards or the resulting amendments ahead of
their effective dates.
Information on the contents of and potential effects on future periods of these standards is presented under
other disclosures in Note 55.
G O I N G C O N C E R N R E P O R T I N G A C C O R D I N G T O T H E U K C O R P O R AT E G O V E R N A N C E C O D E
The Executive Board remains satisfied with the Group’s funding and liquidity position. At 30 September 2015 the
main sources of debt funding included:
• An external revolving credit facility of € 1,535.0 m maturing in June 2018, used to manage the seasonality of the
Group’s cash flows and liquidity,
• a high-yield bond with a nominal value of € 300.0 m, maturing in October 2019,
• € 982.0 m of drawn finance lease obligations and
• Bank liabilities of € 494.1 m, being mainly loans used to acquire property, plant and equipment.
The revolving credit facility requires compliance with certain financial covenants and these covenants were all
complied with at the balance sheet date.
In accordance with provision C1.3 of the 2014 revision of the UK Corporate Governance Code, the Executive Board
confirms that it is considered appropriate to prepare the financial statements on the going concern basis.
Restatement of prior reporting period
The following restatements were made for financial year 2013 / 14:
R E S TAT E M E N T C A U S E D B Y I F R S 1 0 A N D I F R S 11
In accordance with the transition guidance, the prior year values of the items impacted by the reclassifications
were restated throughout the financial statements upon the first-time application of these standards.
R E S TAT E M E N T C A U S E D B Y I A S 2 8
The impact of the amendment to IAS 28 was that 70 % of the TUI Group’s investment in Hapag-Lloyd AG , worth
€ 327.4 m no longer met the criteria to be classified as held for sale, so was restated to be consolidated using the
equity method. This resulted in assets held for sale declining by € 327.4 m as at 30 September 2014. The 30 %
share of the stake, worth € 140.2 m, continued to be carried under assets held for sale. The carrying value of joint
ventures and associates increases by € 344.4 m as at 30 September 2014, whilst Revenue reserves were restated
to reflect the total income from the at equity measurement of € 17.0 m from 1 April 2014.
NOTES
173
174
NOTES
The prior year numbers in the consolidated income statement and the statement of other comprehensive income
were restated to reflect the profit contributions of the stake in Hapag-Lloyd AG , measured using the equity method,
for the period from 29 April 2014 until 30 September 2014.
R E S TAT E M E N T C A U S E D B Y D I S C O N T I N U E D O P E R AT I O N
Due to the planned sale of the LateRooms Group segment in October 2015 the segment was reported as a
discontinued operation as at 30 September 2015 in line with IFRS 5. In the consolidated income statement, the
result from this discontinued operation is shown separately as result from discontinued operation. The prior year
consolidated income statement was restated accordingly.
The restatements are shown in the tables below.
R E S TAT E D I T E M S O F T H E I N C O M E S TAT E M E N T O F T H E T U I G R O U P
F O R T H E P E R I O D F R O M 1 O C T 2 0 13 TO 3 0 S E P 2 0 14
Restatements
€ million
Turnover
Cost of sales
Gross profit
Financial income
Financial expenses
Earnings before income taxes from continuing
operations
Income taxes
Group profit for the year attributable to
shareholders of TUI AG
Group profit for the year attributable to
non-controlling interest
before
restatement
Adoption of
IFRS 10 and
IFRS 11
Adoption of
IA S 28 new
Discontinued
operation
restated
18,714.7
16,436.6
2,278.1
1,577.3
36.2
305.2
40.0
– 103.1
– 93.1
– 10.0
– 6.7
– 0.1
– 4.3
2.1
–
–
–
–
–
–
– 15.3
– 74.8
– 42.7
– 32.1
– 36.8
0.7
–
–
18,536.8
16,300.8
2,236.0
1,533.8
36.8
300.9
26.8
505.6
221.7
283.9
–
283.9
3.0
0.8
2.2
–
2.2
– 15.3
–
– 15.3
–
– 15.3
5.4
– 10.0
15.4
– 15.4
–
498.7
212.5
286.2
– 15.4
270.8
104.7
1.0
– 15.3
–
90.4
179.2
1.2
–
–
180.4
R E S TAT E D I T E M S I N T H E S TAT E M E N T O F C O M P R E H E N S I V E I N C O M E O F T H E T U I G R O U P
F O R T H E P E R I O D F R O M 1 O C T 2 0 13 TO 3 0 S E P 2 0 14
Restatements
€ million
Group profit
Items that will not be reclassified to profit or loss
Cash Flow Hedges
Income tax related to items that may be reclassified
Items that may be reclassified to profit or loss
attributable to shareholders of TUI AG
attributable to non-controlling interest
before
restatement
Adoption of
IFRS 10 and
IFRS 11
Adoption of
IA S 28 new
restated
283.9
1.4
– 214.2
– 150.1
122.7
15.5
– 21.3
– 34.1
– 248.3
35.6
– 12.2
47.8
2.2
–
–
– 1.5
– 3.6
1.3
0.5
– 3.3
– 3.3
– 1.1
– 0.5
– 0.6
– 15.3
– 3.9
– 3.9
36.5
–
–
–
36.5
32.6
17.3
17.3
–
270.8
– 2.5
– 218.1
– 115.1
119.1
16.8
– 20.8
– 0.9
– 219.0
51.8
4.6
47.2
NOTES
175
176
NOTES
R E S TAT E D I T E M S I N T H E B A L A N C E S H E E T O F T H E T U I G R O U P A S AT 1 O C T 2 0 13 A N D 3 0 S E P 2 0 14
1 Oct 2013
€ million
Assets
Investments in joint ventures and associates
Deferred tax assets
Non-current assets
lnventories
Current tax assets
Current assets
* As reported in the annual report as at 30 September 2014
before
restatement
2014 / 15*
Adoption of
IFRS 10 and
IFRS 11
restated
866.2
2,682.0
1,386.4
71.5
37.9
224.6
8,645.8
– 0.2
– 0.6
3.8
– 0.1
–
– 1.5
1.4
115.4
1,876.8
49.1
53.9
2,701.7
11.6
4,808.5
13,454.3
– 0.3
– 4.2
–
– 0.2
– 27.7
–
– 32.4
– 31.0
30 Sep 2014
before
restatement
Adoption of
IFRS 10 and
IFRS 11
Amendment
IA S 28
restated
866.0
2,681.4
1,390.2
71.4
37.9
223.1
8,647.2
933.5
2,836.6
988.0
62.7
76.3
238.1
8,647.2
– 0.1
– 0.6
4.0
–
– 0.5
– 2.2
0.6
–
–
344.4
–
–
–
344.4
933.4
2,836.0
1,336.4
62.7
75.8
235.9
8,992.2
115.1
1,872.6
49.1
53.7
2,674.0
11.6
4,776.1
13,423.3
126.5
1,917.8
171.4
94.0
2,286.0
483.3
5,379.0
14,026.2
– 0.2
– 6.6
– 1.7
– 0.1
– 28.0
–
– 36.6
– 36.0
–
–
–
–
–
– 327.4
– 327.4
17.0
126.3
1,911.2
169.7
93.9
2,258.0
155.9
5,015.0
14,007.2
NOTES
177
R E S TAT E D I T E M S I N T H E B A L A N C E S H E E T O F T H E T U I G R O U P A S AT 1 O C T 2 0 13 A N D 3 0 S E P 2 0 14
1 Oct 2013
before
restatement
2014 / 15*
Adoption of
IFRS 10 and
IFRS 11
restated
Revenue reserves
Equity
118.7
2,016.4
– 19.6
1,996.8
– 2.4
– 2.4
– 0.7
– 3.1
Other liabilities
30.7
109.2
98.4
2,180.2
3,857.4
449.2
483.0
935.5
3,049.2
178.8
134.0
2,819.6
7,117.1
7,600.1
13,454.3
€ million
Other provisions
Current provisions
Trade payables
Other liabilities
Current liabilities
30 Sep 2014
before
restatement
Adoption of
IFRS 10 and
IFRS 11
Amendment
IA S 28
restated
116.3
2,014.0
– 20.3
1,993.7
321.7
2,405.4
111.7
2,517.1
– 2.6
– 2.6
– 1.3
– 3.9
17.0
17.0
–
17.0
336.1
2,419.8
110.4
2,530.2
– 0.1
– 1.4
– 4.8
– 6.3
– 6.3
30.6
107.8
93.6
2,173.9
3,851.1
20.7
147.3
134.9
2,149.8
3,993.8
–
– 2.5
– 4.4
– 6.9
– 6.9
–
–
–
–
–
20.7
144.8
130.5
2,142.9
3,986.9
– 1.7
– 1.7
1.8
– 7.3
– 1.5
– 1.5
– 11.4
– 19.9
– 21.6
– 31.0
447.5
481.3
937.3
3,041.9
177.3
132.5
2,808.2
7,097.2
7,578.5
13,423.3
472.0
504.1
214.5
3,301.2
242.0
101.5
3,152.0
7,011.2
7,515.3
14,026.2
– 1.0
– 1.0
2.7
– 9.1
– 0.1
– 0.3
– 17.4
– 24.2
– 25.2
– 36.0
–
–
–
–
–
–
–
–
–
17.0
471.0
503.1
217.2
3,292.1
241.9
101.2
3,134.6
6,987.0
7,490.1
14,007.2
* As reported in the annual report as at 30 September 2014
A detailed presentation of the impact on the equity items is shown in the statement of changes in equity.
R E S TAT E D I T E M S I N T H E C A S H F L O W S TAT E M E N T O F T H E T U I G R O U P F O R T H E P E R I O D
F R O M 1 O C T 2 0 13 TO 3 0 S E P 2 0 14
Adoption of
€ million
Cash inflow from operating activities
Cash outflow from financing activities
Net change in cash and cash equivalents
Change in cash and cash equivalents due to exchange rate fluctuation
Change in cash and cash equivalents due to changes in the group of
Change in cash and cash equivalents without cash effects
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
before
restatement
IFRS 10 and
IFRS 11
restated
1,074.7
– 586.2
– 318.9
169.6
– 1.6
– 0.2
– 0.1
0.1
– 0.2
– 0.1
1,074.5
– 586.3
– 318.8
169.4
– 1.7
3.8
– 587.5
2,701.7
2,286.0
–
–
– 27.7
– 28.0
3.8
– 587.5
2,674.0
2,258.0
178
NOTES
Principles and methods of consolidation
PRINCIPLES
The consolidated financial statements include all significant subsidiaries directly or indirectly controlled by TUI AG .
Control exists where TUI AG has power over the relevant activities, is exposed to variable returns or has rights to
the returns, and has the ability to affect those variable returns through power over the investee.
As a rule, the control is exercised by means of a direct or indirect majority of voting rights. If the TUI Group holds
less than the majority of voting rights in a shareholding, it may exercise control due to contractual agreements or
similar arrangements.
In assessing control, the existence and effect of potential voting rights that are currently exercisable or convertible
are taken into account. Consolidation of subsidiaries starts from the date TUI gains control. When TUI ceases to
control the corresponding companies, they are removed from the group of consolidated companies.
The consolidated financial statements are prepared from the separate or single-entity financial statements of
TUI AG and its subsidiaries, drawn up on the basis of uniform accounting, measurement and consolidation methods
and usually exclusively audited or reviewed by auditors.
Associates for which the TUI Group is able to exert significant influence over the financial and operating policy
decisions within these companies are accounted for using the equity method. As a rule, significant influence is
assumed if TUI AG directly or indirectly holds voting rights of 20 to less than 50 per cent.
Stakes in joint ventures are also measured using the equity method. A joint venture is a company managed jointly
by the TUI Group with one or several partners based on a contractual agreement, in which the parties that jointly
exercise control have rights to the company’s net assets. Joint ventures also include companies in which the TUI
Group holds a majority or minority of voting rights but in which decisions about the relevant activities may only
be taken on an unanimous basis due to contractual agreements.
The dates as of which associates and joint ventures are included in or removed from the group of companies
measured at equity are determined in a manner consistent with that applied to subsidiaries. At equity measurement
in each case is based on the last annual financial statements available or the interim financial statements as at
30 September if the balance sheet dates differ from TUI AG ’s balance sheet date. This affects 33 companies with
a financial year from 1 January to 31 December, four companies with a financial year from 1 November to 31 October
of the following year and two companies with a financial year from 1 April to 31 March of the following year.
NOTES
179
G R O U P O F C O N S O L I D AT E D C O M PA N I E S
In financial year 2014 / 15, the consolidated financial statements included a total of 532 subsidiaries besides TUI AG .
77 subsidiaries were not included in the consolidated financial statements. Even when taken together, these companies are not significant for the presentation of a true and fair view of the net assets, financial position and results
of operations of the Group.
D E V E L O P M E N T O F T H E G R O U P O F C O N S O L I D AT E D C O M PA N I E S *
A N D T H E G R O U P C O M PA N I E S M E A S U R E D AT E Q U I T Y
Additions due to
Disposals due to
Adoption of
Adoption of
Balance
30 Sep 2014 IFRS 10 and IFRS 11 IFRS 10 and IFRS 11
Consolidated subsidiaries
Associates
Joint ventures
622
22
35
–
–
3
2
1
–
Balance
1 Oct 2014
restated
Additions
Disposals
Balance
30 Sep 2015
620
21
38
21
–
1
109
2
6
532
19
33
* Excl. TUI AG
Due to the first-time application of IFRS 10 and IFRS 11 from 1 October 2014, the number of companies included
in consolidation and measured at equity reported as at 30 September 2014 was restated. Due to the first-time
application of the standards, two companies previously included in consolidation were classified as joint ventures
and are now measured at equity; they are therefore no longer consolidated. Moreover, one company previously
included as an associate is now classified as a joint venture, resulting in the removal of one company from associates
and the addition of one company to joint ventures.
Apart from the retrospective changes resulting from the first-time application of IFRS 10 and IFRS 11, a total of
21 companies have been newly included as consolidated subsidiaries since 1 October 2014, with 14 companies
newly established, four companies added due to the purchase of additional stakes and three companies added
due to an expansion of their business operations.
Since 1 October 2014 (restated), a total of 109 companies have been removed from consolidation. 58 of the companies were removed from consolidation due to liquidation, 41 due to divestment and five companies due to
mergers. In addition, five companies were removed from consolidation due to the discontinuation of their business operations. 38 of the companies sold relate to the PE AK Group. For more detailed information about the
sale of the PE AK Group, please refer to the section on “Acquisitions – Divestments – Discontinued operations”.
19 associated companies and 33 joint ventures are measured at equity as at the balance sheet date. The number
of companies measured at equity has decreased by two since 1 October 2014 (restated), with one disposal and
one addition to the group of consolidated companies. The number of joint ventures measured at equity has decreased by a total of five since 1 October 2014 (restated) due to the addition of one newly established company
and the removal of six companies, three joint ventures of which were sold with the remaining three companies
now included in consolidation due to the acquisition of additional stakes.
The major direct and indirect subsidiaries, associates and joint ventures of TUI AG are listed under “Other Notes –
TUI Group Shareholdings”.
180
NOTES
The effects of the changes in the group of consolidated companies in financial year 2014 / 15 on financial years
2014 / 15 and 2013 / 14 are outlined below. While the value of companies deconsolidated in financial year 2014 / 15
posted in the statement of financial position is carried as per the closing date for the previous period, items in the
income statement are also shown for a part year period of financial year 2014 / 15.
I M PA C T O F C H A N G E S I N T H E G R O U P O F C O N S O L I D AT E D C O M PA N I E S O N T H E
S TAT E M E N T O F F I N A N C I A L P O S I T I O N
Additions
30 Sep 2015
Disposals
30 Sep 2014
7.1
0.2
4.4
0.4
0.4
0.4
61.2
50.9
11.9
0.1
4.4
48.3
Additions
2014 / 15
2014 / 15
Disposals
2013 / 14
2.2
–
2.0
–
–
–
0.2
–
0.2
108.3
8.1
120.4
14.1
– 7.0
– 17.2
20.3
– 1.1
21.4
152.1
7.1
159.7
–
– 53.0
– 11.6
– 41.9
4.5
– 46.4
€ million
Non-current assets
Current assets
Non-current financial liabilities
Current financial liabilities
Non-current other liabilities
Current other liabilities
I M PA C T O F C H A N G E S I N T H E G R O U P O F C O N S O L I D AT E D C O M PA N I E S O N T H E
C O N S O L I D A T E D I N C O M E S T A T E M E N T € million
Turnover with third parties
Turnover with consolidated Group companies
Cost of sales and administrative expenses
Other income / other expenses
Financial expenses
Income taxes
M E RG E R O F T U I AG A N D T U I T R AV E L PLC
On 28 October 2014 the shareholders of TUI AG and the minority shareholders of TUI Travel PLC created the
essential prerequisites for the merger between the two companies at General Meetings held in Hanover and London.
The capital increase in exchange for non-cash contribution, resolved by the Extraordinary General Meeting of
TUI AG , took effect on 11 December 2014 upon registration in the Berlin and Hanover commercial registers. Due
to the issue of 242,764,546 new shares, subscribed capital rose by € 620.6 m with a proportionate share in the
capital stock per share of around € 2.56. In the consolidated financial statements according to IFRS , the difference
between the value of these shares, measured at the stock market share price on the day of registration in the
commercial register, and the proportionate share in the capital stock had to be transferred to the capital reserve
as a premium worth € 2,693.1 m. The associated after-tax issuance costs of € 16.3 m were deducted from the
capital reserve.
The merger between TUI AG and TUI Travel PLC was executed through the acquisition of the outstanding minority
interests in TUI Travel PLC by TUI AG . The shareholders of TUI Travel PLC with the exception of TUI AG received
0,399 new shares in TUI AG for each TUI Travel share that they held. As this share swap constituted a transaction
with non-controlling interests in accordance with IFRS , the negative shares in equity attributable to them of
€ 606.2 m had to be eliminated against the revenue reserves.
TUI Travel PLC was re-registered as a private company and became TUI Travel Ltd. with effect from 19 January 2015.
The following table shows the impact of the merger on TUI AG ’s equity before non-controlling interest in the
period under review:
EFFECTS ON EQUITY BEFORE NON-CONTROLLING INTEREST
€ million
Effects on subscribed capital
Increase in capital reserves
Transaction costs
Effects on capital reserves
Carrying amount of non-controlling interest acquired
Consideration for non-controlling interest acquired
Transaction costs
Amount recognised in retained earnings
Effects on equity before non-controlling interest
2014 / 15
620.6
2,693.1
– 16.3
2,676.8
– 606.2
– 3,313.7
– 46.0
– 3,965.9
– 668.5
Due to this transaction, TUI AG is now the beneficial owner of all shares in TUI Travel PLC . The Extraordinary
General Meeting (EGM) of TUI AG on 28 October 2014 resolved to create conditional capital in order to facilitate the
future transfer of TUI Travel PLC shares that may arise from conversions of convertible bonds of TUI Travel PLC .
Due to the conversion of the convertible bonds of TUI Travel PLC completed to date, 23,640,450 new shares in
TUI AG were created.
The EGM also resolved to create authorised capital in order to secure the share-based payment schemes granted
in 2012 and 2013 in the former Travel Sector. The General Meeting of TUI Travel PLC on 28 October 2014 resolved
to amend the Articles of Association accordingly, stipulating that all entitlements to shares in TUI Travel PLC
arising in future from these schemes will have to be converted into TUI AG shares at an exchange ratio of 1:0,399.
These arrangements excluded £ 200.0 m of convertible bonds issued by TUI Travel PLC , acquired by Deutsche
Bank in 2010. TUI AG exercised economic control over these bonds through a financing agreement. In connection
with the completion of the merger, Deutsche Bank and TUI AG agreed in December 2014 to terminate this financing scheme early, with redemption of the remaining amount of £ 150.0 m to take place in two steps. Accordingly, a
payment of £ 83.3 m (or € 105.8 m) was made in December 2014. On 27 January 2015, TUI AG paid the amount of
£ 66.7 m (or € 89.4 m) still outstanding at that point in time and a compensation of around £ 3 m for the early repayment as consideration for the transfer of the bonds. In March 2015, TUI Travel Ltd. redeemed the convertible
bonds early by paying £ 200.0 m to TUI AG .
In the wake of the merger, the Group’s funding was also revised. The credit facility previously granted to TUI Travel PLC
was replaced by corresponding financing agreements of TUI AG . The newly negotiated funding scheme consists of
a revolving credit line of € 1,535.0 m and a facility to grant bank guarantees of € 215.0 m, maturing on 30 June 2018.
Total transaction costs amounted to € 16.8 m. They are included as prepaid expenses in the statement of financial
position and charged to expenses on a straight-line basis over the term of the credit facility.
Moreover, due to the completion of the merger, the restrictions on the proceeds of € 300.0 m from the issuance
of a high-yield bond in September 2014 were lifted. In the prior year, these amounts had been invested in a money
market fund on a fiduciary basis on behalf of TUI AG . Due to the disposal of the shares in the money market fund,
financial assets available for sale decreased by € 300.0 m.
NOTES
181
182
NOTES
A C Q U I S I T I O N S – D I V E S T M E N T S – D I S C O N T I N U E D O P E R AT I O N
ACQUISITIONS
In financial year 2014 / 15, 11 travel agencies were acquired in the form of asset deals. Moreover, further interests
were acquired in aQi Hotel Schladming GmbH and aQi Hotelmanagement GmbH, previously measured at equity.
Due to the acquisitions, the TUI Group now holds 100 % of the shares in each of these companies. The consideration
transferred by the TUI Group for the acquisitions exclusively comprises purchase price payments and totals € 3.4 m.
The acquisitions did not have a material effect on turnover or the Group result for the reporting period.
No major acquisitions were carried out after the balance sheet date.
The purchase price allocations of the following companies and businesses acquired in financial year 2013 / 14 were
finalised within the twelve-month timeframe provided under IFRS 3 in the present annual financial statements
without having a major impact on the consolidated statement of financial position:
•
•
•
•
•
•
Le Passage to India Tours & Travels pvt. Ltd, New Delhi, India
Global Obi S.L, Palma de Mallorca, Spain
6 travel agencies in Germany
OF T REISEN GmbH, Rengsdorf, Germany
Carlson Saint Martin SAS (Group), Anse Marcel, Saint Martin
Voukouvalides Tours Tourism S.A., Kos, Greece
DIVESTMENTS
In May 2015, the decision was taken to split up the adventure travel portfolio, pooled in the Australian subsidiary
PE AK Adventure Travel Group Ltd between TUI AG and the then non-controlling shareholders in PE AK . On
31 July 2015, an agreement was executed with the non-controlling shareholders to retain, in particular, the activities
in Europe and North America in the Group and to transfer the remaining business to the non-controlling shareholders. Upon execution, the companies to be transferred, previously included in the Specialist Group segment
had to be derecognised. In return, TUI AG received the non-controlling stakes in the companies remaining within
the Group. The transaction generated a profit of € 4.4 m, included under Other income. This profit includes the
amounts reclassified from equity.
The effects of the other divestments on the TUI Group’s net assets, financial position and results of operations
were immaterial.
D I S C O N T I N U E D O P E R AT I O N
TUI AG has decided to exit the LateRooms Group segment. The LateRooms Group consists of the online hotel
portals LateRooms, AsiaRooms and MalaPronta, which provide accommodation services to final customers, in
particular in the UK , Asia and Brazil. The operating business of AsiaRooms was discontinued in the second quarter
of 2014 / 15. Expenses of € 17.2 m arose in connection with the closure. The discontinuation of the operating business
of MalaPronta took place in the fourth quarter of 2014 / 15, resulting in expenses of € 5.4 m. On 6 October 2015,
LateRooms was sold. The measurement of LateRooms as at 30 September 2015, based on the agreed purchase
price less costs to sell, resulted in impairment charges of € 36.0 m.
The result from this discontinued operation is reported separately from the income and expenses of continuing
operations in the consolidated income statement, shown in a separate line under Result from discontinued operation.
The income statements of the consolidated interim financial statements of the prior year were restated accordingly.
I N C O M E S TAT E M E N T O F T H E D I S C O N T I N U E D O P E R AT I O N L AT E R O O M S G R O U P F O R T H E P E R I O D
F R O M 1 O C T 2 0 14 TO 3 0 S E P 2 0 15
€ million
Turnover
Cost of sales
Gross profit
Other expenses
Financial expenses
Earnings before income taxes from the discontinued operation
Income taxes
Result from the discontinued operation
Result from the measurement of the discontinued operation
Result from the discontinued operation
Group loss for the year attributable to shareholders of TUI AG
Group loss for the year attributable to non-controlling interest
2014 / 15
2013 / 14
69.7
51.4
18.3
43.2
7.3
0.7
– 32.9
– 0.1
– 32.8
– 36.0
– 68.8
– 67.0
– 1.8
74.8
42.7
32.1
36.8
–
0.7
– 5.4
10.0
– 15.4
–
– 15.4
– 8.3
– 7.1
Earnings before income taxes declined year-on-year in financial year 2014 / 15 due to expenses incurred in connection
with the closure of AsiaRooms and MalaPronta.
The result from the measurement of the discontinued operation based on the purchase price less costs to sell
does not include any income taxes.
The assets and liabilities are shown separately in the consolidated statement of financial position under “Assets
held for sale” and “Liabilities related to assets held for sale”. The table below presents the key asset and liability
groups of the discontinued operation.
NOTES
183
184
NOTES
A S S E T S A N D L I A B I L I T I E S O F T H E D I S C O N T I N U E D O P E R AT I O N L AT E R O O M S G R O U P
A S AT 3 0 S E P 2 0 15
€ million
Assets
Deferred tax assets
Non-current assets
Current assets
€ million
30 Sep 2015
3.9
7.5
7.8
19.2
10.2
9.5
19.7
38.9
30 Sep 2015
Revenue reserves
Equity
7.3
7.3
0.1
7.4
4.0
4.0
Trade payables to third-parties
Other liabilities
Current liabilities
10.6
11.5
5.4
27.5
38.9
Receivables from and payables to the Group’s continuing operations are eliminated in the consolidated statement
of financial position and are therefore not included in the items “Assets held for sale” and “Liabilities related to
assets held for sale”.
R E C O N C I L I AT I O N T O A S S E T S H E L D F O R S A L E I N T H E F I N A N C I A L P O S I T I O N O F T H E T U I G R O U P
A S AT 3 0 S E P 2 0 15
€ million
Current and non-current assets of the LateRooms Group
Elimination of receivables from continuing operations
30 Sep 2015
38.9
– 0.1
38.8
R E C O N C I L I AT I O N T O L I A B I L I T I E S R E L AT E D T O A S S E T S H E L D F O R S A L E I N T H E F I N A N C I A L P O S I T I O N
O F T H E T U I G R O U P A S AT 3 0 S E P 2 0 15
30 Sep 2015
€ million
Current and non-current liabilities of the LateRooms Group
Elimination of liabilities against continuing operations
Liabilities related to assets held for sale
31.5
–
31.5
The consolidated cash flow statement shows the cash flows of the overall Group including the discontinued operation.
The table below provides a separate presentation of the cash flows of the discontinued operation.
C O N D E N S E D C A S H F L O W S TAT E M E N T O F T H E D I S C O N T I N U E D O P E R AT I O N L AT E R O O M S G R O U P
€ million
Cash outflow from operating activities
Cash inflow from financing activities
Change in cash and cash equivalents due to exchange rate fluctuation
Net change in cash and cash equivalents of the discontinued operation
2014 / 15
2013 / 14
– 13.6
– 8.3
16.3
– 0.9
– 6.5
– 10.6
– 9.3
11.4
–
– 8.5
F O R E I G N E X C H A N G E T R A N S L AT I O N
Transactions in foreign currencies are translated into the functional currency at the foreign exchange rates at the
date of the transaction. Any gains and losses resulting from the execution of such transactions and the translation
of monetary assets and liabilities denominated in foreign currencies at the foreign exchange rate at the date of
the transaction are shown in the income statement, with the exception of gains and losses to be recognised in
equity as qualifying cash flow hedges.
The annual financial statements of companies are prepared in the respective functional currency. The functional
currency of a company is the currency of the primary economic environment in which the company operates. With
the exception of a small number of companies, the functional currencies of all subsidiaries correspond to the
currency of the country of incorporation of the respective subsidiary.
Where subsidiaries prepare their financial statements in functional currencies other than the euro, being the
Group’s reporting currency, the assets, liabilities and notes to the statement of financial position are translated at the
average rate of exchange applicable at the balance sheet date (closing rate). Goodwill allocated to these companies
and adjustments of the fair value arising on the acquisition of a foreign company are treated as assets and liabilities
of the foreign company and also translated at the average rate of exchange applicable at the balance sheet date.
The items of the income statement and hence the result for the year shown in the income statement are translated
at the average rate of the month in which the respective transaction takes place.
Differences arising on the translation of the annual financial statements of foreign subsidiaries are reported outside
profit and loss and separately shown as foreign exchange differences in the consolidated statement of changes in
equity. When a foreign company or operation is sold, any foreign exchange differences previously included in
equity outside profit and loss are recognised as a gain or loss from disposal in the income statement through
profit and loss.
NOTES
185
186
NOTES
Translation differences relating to non-monetary items with changes in their fair values eliminated through profit
and loss (e. g. equity instruments measured at their fair value through profit and loss) are included in the income
statement. In contrast, translation differences for non-monetary items with changes in their fair values taken to
equity (e. g. equity instruments classified as available for sale) are included in revenue reserves.
The TUI Group did not hold any subsidiaries operating in hyperinflationary economies in the financial year under
review, nor in the previous year.
The translation of the financial statements of foreign companies measured at equity follows the same principles
for adjusting carrying amounts and translating goodwill as those used for consolidated subsidiaries.
N E T I N V E S T M E N T I N A F O R E I G N O P E R AT I O N
Monetary items receivable from or payable to a foreign operation, the settlement of which is neither planned nor
likely in the foreseeable future, essentially constitute part of a net investment in this foreign operation. Foreign
exchange differences from the translation of these monetary items are recognised in other comprehensive income.
E XC H A N G E R AT E S O F C U R R E N C I E S O F R E L E VA N C E T O T H E T U I G R O U P
1 € equivalent
30 Sep 2015
Closing rate
30 Sep 2014
Sterling
US dollar
Swiss franc
Swedish krona
0.74
1.12
1.09
9.41
0.78
1.26
1.21
9.15
Annual average rate
2014 / 15
2013 / 14
0.74
1.15
1.10
9.35
0.82
1.36
1.22
9.00
C O N S O L I D AT I O N M E T H O D S
The recognition of the net assets of acquired businesses is based on the acquisition method. Accordingly all identifiable assets and all liabilities assumed are measured at fair value as of the acquisition date. Subsequently, the
consideration for the stake is measured at fair value and eliminated against the acquiree’s revalued equity attributable to the acquired share. As in the prior year, the option to measure the non-controlling interests at their fair
value (full goodwill method) was not used.
Any excess of acquisition costs over net assets acquired is capitalised as goodwill and recognised as an asset for
the acquired subsidiary in accordance with the provisions of IFRS 3. Any negative goodwill is recognised immediately in profit and loss and presented as other income.
When additional shares are purchased after obtaining control, the difference between the purchase price and the
carrying amount of the stakes acquired is recognised directly in equity. The effects from sales of stakes not entailing a loss of control are also recognised directly in equity. By contrast, when control is obtained or lost, gains
or losses are recognised in profit and loss. In the case of business combination achieved in stages (where the acquirer held an equity interest before he obtained control), the equity stake previously held in the acquired company is revalued at the fair value applicable at the acquisition date and the resulting gain or loss is recognised in
profit or loss. For transactions involving a loss of control, the profit or loss does not only comprise the difference
between the carrying amounts of the disposed stakes and the consideration received but also the result from the
revaluation of the remaining shares.
On loss of control of a subsidiary the gain or loss on derecognition will be calculated as the difference of the fair
value of the consideration plus the fair value of any investment retained in the former subsidiary less the share
of the book value of the net assets of the subsidiary. Any gains or losses previously recognised in other comprehensive income from currency translations or the valuation of financial assets and liabilities will be reclassified to
the profit or loss statement. When a subsidiary is sold, any goodwill allocated to the respective subsidiary is taken
into account in the calculation of the profit or loss of disposal.
The Group’s associates and joint ventures are measured at equity and included at the cost to purchase as at the
acquisition date. The Group’s stake in associates and joint ventures includes the goodwill arising from the respective
acquisition.
The Group’s share in profits and losses of associates and joint ventures is carried in the income statement as from
the date of acquisition (Share of result from joint ventures and associates), while the Group’s share in changes in
reserves is shown in its revenue reserves. The accumulated changes arising after the acquisition are shown in the
carrying amount of the participation. When the share in the loss of an associated company or joint venture equals
or exceeds the Group’s original stake in this company, including other unsecured receivables, no further losses are
recognised. Any losses exceeding that stake are only recognised to the extent that obligations have been assumed
or payments have been made for the associated company or joint venture.
Where the accounting and measurement methods applied by associates and joint ventures differ from the uniform
accounting rules applied in the Group, the differences are adjusted.
Intercompany receivables and payables or provisions are eliminated. Intercompany turnover and other income as
well as the corresponding expenses are eliminated. Intercompany results from intercompany deliveries and services
are reversed through profit and loss, taking account of deferred taxes. However, intercompany losses are an indicator
that an asset may be impaired. Intercompany profits from transactions with companies measured at equity are
eliminated in relation to the Group’s stake in the company. Intercompany transactions are provided at arm’s length.
Accounting and measurement methods
The consolidated financial statements were prepared according to the historical cost principle, with the exception
of certain financial instruments such as financial assets and derivatives held for trading or available for sale as well
as plan assets from externally funded defined-benefit obligations held at fair value at the balance sheet date.
The financial statements of the consolidated subsidiaries are prepared in accordance with uniform accounting and
measurement principles. The amounts recognised in the consolidated financial statements are not determined by tax
regulations but solely by the commercial presentation of the net assets, financial position and results of operations
as set out in the rules of the IASB .
NOTES
187
188
NOTES
TURNOVER RECOGNITION
Turnover comprises the fair value of the consideration received or to be received for the sale of products and
services in the course of ordinary business activities. Turnover is stated excluding value-added tax, returns, discounts
and price rebates and after elimination of intra-Group sales.
Turnover and other income is recognised upon delivery of the service or assets and hence upon transfer of the risk.
The commission fees received by travel agencies for package tours are recognised once the travel agencies have
performed their contractual obligations towards the tour operator. As a rule, this condition is met upon payment by
the customers or, at the latest, at the date of departure. The services of tour operators mainly consist in organising
and coordinating package tours. Turnover from the organisation of tours is therefore recognised in full when the
customer departs. Turnover from individual travel modules booked by the customer directly with airlines, hotel
companies or incoming agencies is recognised when the customers use the services concerned. Income from
non-completed cruises is recognised according to the proportion of contract performance at the balance sheet
date. The percentage of completion is determined as the ratio between travel days completed by the balance sheet
date and overall travel days.
Interest income is reported on a prorated basis according to the effective interest method. Dividends are recognised
when the legal entitlement has arisen.
G O O D W I L L A N D O T H E R I N TA N G I B L E A S S E T S
Acquired intangible assets are carried at cost. Self-generated intangible assets, primarily software for use by the
Group itself, are capitalised at cost where an inflow of future economic benefits for the Group is probable and can
be reliably measured. The cost to produce comprises direct costs and directly allocable overheads. Intangible
assets with a finite service life are amortised over the expected useful life.
Intangible assets acquired as a result of business combinations, such as order book, customer base or trademark
rights, are included at their fair value as at the date of acquisition and are amortised on a straight-line basis.
U S E F U L L I V E S O F I N TA N G I B L E A S S E T S
Useful lives
Concessions, property rights and similar rights
Trademarks at acquisition date
Order book as at acquisition date
Software
Customer base as at acquisiton date
up to 20 years
15 to 20 years
until departure date
3 to 10 years
up to 15 years
If there are any events or indications suggesting potential impairment, the amortised carrying amount of the
intangible asset is compared with the recoverable amount. Any losses in value going beyond wear-and-tear depreciation are taken into account through the recognition of impairments.
Depending on the functional area of the intangible asset, depreciation, amortisation and impairments are included
under cost of sales or administrative expenses. If the original cause of a prior year impairment no longer applies,
the impairment is written back to other income.
Intangible assets with indefinite useful lives are not amortised but are tested for impairment at least annually. In
addition, impairment tests are conducted if there are any events or indications suggesting potential impairment.
The TUI Group’s intangible assets with an indefinite useful life consist exclusively of goodwill.
Impairment tests for goodwill are conducted on the basis of cash generating units. According to the IASB rules,
cash generating units are the smallest identifiable group of assets that generates cash inflows from continuing use
that are largely independent of the cash inflows from other assets or groups of assets.
Impairments are recognised where the carrying amount of the tested units plus the allocated goodwill exceeds
the recoverable amount. The recoverable amount is the higher of fair value less costs of disposal and the present
value of future cash flows based on continued use (value in use). The fair value less costs of disposal corresponds
to the amount that could be generated between knowledgeable, willing, independent business partners after
deduction of the costs of disposal. Due to the restrictions applicable to the determination of cash flows when
deriving the value in use, e. g. the requirement not to account for earnings effects from investments in expansions
or from restructuring activities for which no provision was formed according to IAS 37, the fair value less costs of
disposal usually exceeds the value in use and therefore represents the recoverable amount.
Impairments of goodwill required are shown separately in the consolidated income statement. In accordance with
IAS 36, reversals of impairment losses for goodwill are prohibited.
Property, plant and equipment are measured at amortised cost. The costs to purchase comprise the costs to
purchase an asset and to place it in a working condition. The costs to produce are determined on the basis of
direct costs and directly attributable indirect costs and depreciation.
Borrowing costs directly associated with the acquisition, construction or production of qualifying assets are included in the costs to acquire or produce these assets until the assets are ready for their intended use. The
capitalisation rate is 4.00 % for the current financial year and 6.00 % for the previous year. In financial year 2014 / 15,
borrowing costs of € 8.8 m (previous year € 10.1 m) were capitalised as part of the costs to purchase and costs to
produce. Other borrowing costs are recognised as current expenses.
To the extent that funds are borrowed specifically for the purpose of obtaining a qualifying asset, the underlying
capitalisation rate is determined on the basis of the specific borrowing cost; in all other cases the weighted average
of the borrowing costs applicable to the borrowings outstanding is applied.
NOTES
189
190
NOTES
Depreciation of property, plant and equipment is based on the straight-line method, based on the customary
useful lives. Use-related depreciation and amortisation is based on the following useful lives:
U S E F U L L I V E S O F P R O P E R T Y, P L A N T A N D E Q U I P M E N T
Useful lives
Hotel buildings
Other buildings
Cruise ships
Yachts
Motorboats
Aircraft
Fuselages and engines
Engine overhaul
Major overhaul
Spare parts
Other machinery and fixtures
Operating and business equipment
30 to 40 years
up to 50 years
20 to 30 years
5 to 15 years
15 to 24 years
up to 18 years
depending on intervals, up to 5 years
depending on intervals, up to 5 years
12 years
up to 40 years
up to 10 years
Moreover, the level of depreciation is determined by the residual amounts recoverable at the end of the useful life
of an asset. The residual value assumed in first-time recognition for cruise ships and hotel complexes is 30 % of
the acquisition costs. The determination of the depreciation of aircraft fuselages, aircraft engines and spare parts
in first-time recognition is based on a residual value of 20 % of the cost of acquisition.
Both the useful lives and residual values are reviewed on an annual basis when preparing the annual financial
statements. The review of the residual values is based on comparable assets at the end of their useful lives as at the
current point in time. Any adjustments required are recognised as a correction of depreciation over the remaining
useful life of the asset. The adjustment of depreciation is recognised retrospectively for the entire financial year
in which the review has taken place. Where the review results in an increase in the residual value so that it exceeds
the remaining net carrying amount of the asset, depreciation is suspended. In this case, the amounts are not
written back.
Any losses in value going beyond wear-and-tear depreciation are taken into account through the recognition of
impairment losses. If there are any events or indications suggesting impairment, the required impairment test is
performed to compare the carrying amount of an asset with the recoverable amount. The recoverable amount is
the higher of an asset’s fair value less costs of disposal and the value of future cash flows attributable to the asset
(value in use).
Investment grants received are shown as reductions in the costs to purchase or produce items of property, plant
or equipment where these grants are directly allocable to individual items. Where a direct allocation of grants is not
possible, the grants and subsidies received are included as deferred income under other liabilities and reversed in
accordance with the use of the investment project.
LEASES
FINANCE LEASES
In accordance with IAS 17, leased property, plant and equipment in which the TUI Group assumes substantially
all the risks and rewards of ownership is capitalised. Capitalisation is based on the fair value of the asset or the
present value of the minimum lease payments, if lower. Depreciation is charged over the useful life or the lease
term, if shorter, on the basis of the depreciation method applicable to comparable purchased or manufactured
assets. Payment obligations arising from future lease payments are disclosed as liabilities, excluding future interest
expenses. Every lease payment is broken down into an interest portion and a redemption portion so as to produce
a constant periodic rate of interest on the remaining balance of the liability. The interest portion is disclosed in
the income statement through profit or loss.
Where companies of the TUI Group are lessors in finance leases, receivables equivalent to the net investment
value are included for the leases. The periodic distribution of the income from finance leases results in constant
interest payments on the outstanding net investment volume of the leases over the course of time.
O P E R AT I N G L E A S E S
Both expenses incurred and income received under operating leases are recognised in the income statement on
a straight-line basis over the term of the corresponding leases.
SALE-AND-LE A SE-BACK TR ANSAC TIONS
Gains from sale-and-lease-back transactions resulting in a finance lease are recognised in income over the term
of the lease.
If a sale-and-lease-back transaction results in an operating lease, a gain or loss is recognised immediately if the
transaction has demonstrably been carried out at fair value. If a loss is compensated for by future lease payments
at below-market price, this loss is deferred and amortised over the term of the lease agreement. If the agreed
purchase price exceeds fair value, the gain arising from the difference between these two values is also deferred
and amortised.
INVESTMENT PROPERT Y
Property not occupied for use by subsidiaries and exclusively held to generate rental income and capital gains is
recognised at amortised cost. This property is amortised over a period of up to 50 years.
FINANCIAL INSTRUMENTS
Financial instruments are contractual rights or obligations that will lead to an inflow or outflow of financial assets
or the issue of equity rights. They also comprise derivative rights or obligations derived from primary assets.
In accordance with IAS 39, financial instruments are broken down into financial assets or liabilities to be measured
at fair value through profit and loss, loans and receivables, financial assets available for sale, financial assets held
to maturity and other liabilities.
In terms of financial instruments measured at fair value through profit and loss, the TUI Group holds derivative
financial instruments mainly to be classified as held for trading as they do not meet the balance sheet-related
criteria as hedges in the framework of a hedging relationship. The fair value option is not exercised. Moreover, the
TUI Group holds financial assets in the loans and receivables and available for sale categories. However, the present
financial statements do not include any assets held to maturity.
NOTES
191
192
NOTES
In financial year 2014 / 15, no major reclassifications were recognised within the individual measurement categories
as in the previous year.
PRIMARY FINANCIAL A SSE TS AND FINANCIAL LIABILITIE S
Primary financial assets are recognised at the value as at the trading date on which the Group commits to buy the
asset. Primary financial assets are classified as loans and receivables or as financial assets available for sale when
recognised for the first time. Loans and receivables as well as financial assets available for sale are initially recognised
at fair value plus transaction costs.
Loans and receivables are non-derivative financial assets with fixed or fixable contractual payments not listed in
an active market. They are shown under trade accounts receivable and other assets in the statement of financial
position and classified as current receivables if they mature within twelve months of the balance sheet date.
In the framework of follow-up measurement, loans and receivables are measured at amortised cost based on the
effective interest method. Value adjustments are made to account for identifiable individual risks. Where objective
information indicates that impairments are required, e. g. substantial financial difficulties of the counterparty,
payment delays or adverse changes in regional industry conditions expected to impact the Group’s borrowers in
the light of past experience, impairments are recognised at an amount corresponding to the expected loss.
Impairments and reversals of impairments are included under cost of sales, administrative expenses or financial
expenses, depending on the nature of the transaction.
Financial assets available for sale are non-derivative financial assets either individually expressly allocated to this
category or not allocable to any other category of financial assets. In the TUI Group, they consist of stakes in
companies and securities. They are allocated to non-current assets unless management intends to sell them
within twelve months of the balance sheet date.
Financial assets available for sale are measured at their fair value upon initial recognition. Changes in the fair
value are included in equity outside profit or loss until the disposal of the assets. If there is objective evidence of
impairment, an impairment loss is taken through profit and loss. Objective evidence may, in particular, be substantial
financial difficulties of the counterparty and significant changes in the technological, market, legal or economic
environment. Moreover, for equity instruments held, a significant or prolonged decline in the fair value below its
cost is also objective evidence of impairment. The TUI Group concludes that a significant decline exists if the fair
value falls by more than 20 % below cost. A decline is assessed as prolonged if the fair value remains below cost
for more than twelve months. In the event of subsequent reversal of the impairment, the impairment included in
profit or loss is not reversed for equity instruments but recognised in other comprehensive income. Where a listed
market price in an active market is not available for shares held in companies and other methods to determine an
objective market value are not applicable, these equity instruments are measured at cost.
A derecognition of assets is primarily recognised as at the date on which the rights for payments from the asset expire
or are transferred and therefore as at the date essentially all risks and rewards of ownership are transferred.
Primary financial liabilities are included in the consolidated statement of financial position if an obligation exists to
transfer cash and cash equivalents or other financial assets to another party. First-time recognition of a primary
liability is recognised at its fair value. For loans taken out, the nominal amount received is reduced by discounts
obtained and borrowing costs paid. In the framework of follow-up measurement, primary financial liabilities are
measured at amortised cost based on the effective interest method.
D E R I V AT I V E F I N A N C I A L I N S T R U M E N T S A N D H E D G I N G
In the framework of initial measurement, derivative financial instruments are measured at the fair value attributable
to them on the date the contract is entered into. The follow-up measurement is also recognised at the fair value
applicable at the respective balance sheet date. Where derivative financial instruments are not part of a hedge in
connection with hedge accounting, they have to be classified as held for trading in accordance with IAS 39.
The method used to recognise profits and losses depends on whether the derivative financial instrument has been
classified as a hedge and on the type of underlying hedged item. Changes in the fair values of derivative financial
instruments are recognised in profit and loss unless they are classified as a hedge in accordance with IAS 39. If
they are classified as an effective hedge in accordance with IAS 39, the transaction is recognised as a hedge.
The TUI Group applies the hedge accounting provisions relating to hedging of balance sheet items and future cash
flows. Depending on the nature of the underlying transaction, the Group classifies derivative financial instruments
either as fair value hedges against exposure to changes in the fair value of assets or liabilities or as cash flow
hedges against variability in cash flows from highly probable future transactions.
Upon conclusion of the transaction, the Group documents the hedge relationship between the hedge and the
underlying item, the risk management goal and the underlying strategy. In addition, a record is kept of the assessment, both at the beginning of the hedge relationship and on a continual basis, as to whether the derivatives used
for the hedge are highly effective in compensating for the changes in the fair values or cash flows of the underlying
transactions.
Changes in the fair value of derivatives used as fair value hedges for the recognised assets or liabilities are recognised
through profit and loss. Moreover, the carrying amounts of the underlying transactions are adjusted through
profit and loss for the gains or losses resulting from the hedged risk.
The effective portion of changes in the fair value of derivatives forming cash flow hedges is recognised in equity.
Any ineffective portion of such changes in the fair value, by contrast, is recognised immediately in the income
statement through profit and loss. Amounts taken to equity are reclassified to the income statement and included
as income or expenses in the period in which the hedged item has an effect on results.
If a hedge expires, is sold or no longer meets the criteria for hedge accounting, the cumulative gain or loss remains
in equity and is only recognised in the income statement through profit and loss when the originally hedged future
transaction occurs. If the future transaction is no longer expected to take place, the cumulative gains or losses
recognised directly in equity are recognised immediately through profit and loss.
INVENTORIE S
Inventories are measured at the lower of cost or net realisable value. Net realisable value is the estimated selling price
less the estimated cost incurred until completion and the estimated variable costs required to sell. All inventories
are written down individually where the net realisable value of inventories is lower than their carrying amounts.
Where the original causes of inventory write-downs no longer apply, the write-downs are reversed. The measurement
method applied to similar inventory items is the weighted average cost formula.
C A S H A N D C A S H E Q U I VA L E N T S
Cash and cash equivalents comprise cash, call deposits, other current highly liquid financial assets with an original
term of a maximum of three months and current accounts. Overdrawn current accounts are shown as liabilities to
banks under current financial liabilities.
NOTES
193
194
NOTES
NON-CURRENT ASSETS HELD FOR SALE
Non-current assets and disposal groups are classified as held for sale if the associated carrying amount will be
recovered principally through sale rather than through continued use.
The reclassification is made at the lower of carrying amount and fair value less costs of disposal. Depreciation and
at equity measurements are suspended. Impairment charges are recognised in profit and loss, with any gains on
subsequent remeasurement resulting in the recognition of profits of up to the amount of the cumulative impairment cost.
EQUITY
Ordinary shares are classified as equity. Costs directly allocable to the issue of new shares or conversion options
are taken to equity on a net after-tax basis as a deduction from the issuance proceeds.
OWN SHARES
The group’s holdings in its own equity instruments are shown as deductions from shareholders’ equity at cost,
including directly attributable transaction costs. Own equity instruments are held by an employee benefit trust
of TUI Travel Ltd. No gain or loss is recognised in the income statement on the purchase or sale of shares by the
employee benefit trust. Any difference between the proceeds from sale and the original cost are being taken to
reserves.
PROVISIONS
Other provisions are formed when the Group has a current legal or constructive obligation as a result of a past
event and where in addition it is probable that assets will be impacted by the settlement of the obligation and the
level of the provision can be reliably determined. Provisions for restructuring comprise severance payments to
employees and payments for the early termination of rental agreements. Provisions for environmental protection
measures, in particular the disposal of legacy industry waste, are recognised if future cash outflows are likely due
to legal and public obligations to implement safeguarding or restoration measures, if the cost of these measures
can be reliably estimated and the measures are not expected to lead to a future inflow of benefits.
Provisions for onerous losses are formed if the unavoidable costs of meeting contractual obligations exceed the
expected economic benefit. Any assets concerned are impaired, if necessary, prior to forming the appropriate
provision. No provisions are recognised for future operating losses.
Where a large number of similar obligations exist, the probability of a charge over assets is determined on the
basis of this group of obligations. A provision is also recognised if the probability of a charge over assets is low in
relation to an individual obligation contained in this group.
Provisions are measured at the present value of the expected expenses, taking account of a pre-tax interest rate,
reflecting current market assessments of the time value of money and the risks specific to the liability. Risks already
taken into account in estimating future cash flows do not affect the discount rate. Increases in provisions due to
accretion of interest are recognised as interest expenses through profit or loss.
The pension provision recognised for defined benefit plans corresponds to the net present value of the defined
benefit obligations (DBO s) as at the balance sheet date less the fair value of the plan assets. Measurement of any
pension assets is limited to the net present value of the value in use in the form of reimbursements from the plan
or reductions in future contribution payments. The DBO s are calculated annually by independent actuaries using
the projected unit credit method. The net present value of the DBO s is calculated by discounting the expected
future outflows of cash at a rate based on the interest rate of top-rated corporate bonds.
Past service cost is immediately recognised through profit or loss. Remeasurements (in particular actuarial gains
and losses) arising from the regular adjustment of actuarial parameters are eliminated against equity outside
profit and loss in full when they occur.
For defined contribution plans, the Group pays contributions to public or private pension insurance plans on the
basis of a statutory or contractual obligation or on a voluntary basis. The Group does not have any further payment
obligations on top of the payment of the contributions. The contributions are recognised under staff costs when
they fall due.
LIABILITIES
Liabilities are always recognised at the date on which they arise at fair value less borrowing and transaction costs.
Over the course of time, liabilities are measured at amortised cost based on application of the effective interest
method.
When issuing bonds comprising a debt component and a second component in the form of conversion options or
warrants, the proceeds obtained for the respective components are recognised in accordance with their character.
At the issuing date, the debt component is included as a bond at a value that would have been generated for the
issue of this debt instrument without corresponding conversion options or warrants on the basis of current market
terms. If the conversion options or warrants have to be classified as equity instruments, the difference over the
issuing proceeds generated is transferred to the capital reserve with deferred taxes taken into account.
As a matter of principle, the foreign exchange differences resulting from the translation of trade accounts payable
are reported as a correction of the cost of sales. Foreign exchange differences from the translation of liabilities
not resulting from normal operating processes are reported under other income / other expenses, financial
expenses / income or administrative expenses, depending on the nature of the underlying liability.
D E F E R R E D TA X E S
In accordance with IAS 12, deferred taxes are determined using the balance sheet liability method. Accordingly,
probable future tax assets and liabilities are recognised for all temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Expected tax savings from the use of losses carried forward assessed as recoverable in the future are recognised
as deferred tax assets. Regardless of the unlimited ability to carry German losses forward which continues to
exist, the annual utilisation is limited by the minimum taxation. Foreign losses carried forward frequently have to
be used within a given country-specific time limit and are subject to restrictions concerning the use of these losses
carried forward for profits on ordinary activities, which are taken into account accordingly in the measurement.
Income tax is directly charged or credited to equity if the tax relates to items directly credited or charged to equity
in the same period or some other period.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available
against which the temporary difference or an unused tax loss can be utilised.
NOTES
195
196
NOTES
Deferred taxes are measured at the tax rates and tax provisions applicable at the balance sheet date or adopted
by law and expected to be applicable at the date of recognition of the deferred tax asset or the payment of the
deferred tax liability.
C U R R E N T I N C O M E TA X E S
The German companies of the TUI Group have to pay trade income tax of 15.2 % (previous year 15.2 % or 15.7 %
depending on the applicable rate). As in the prior year, the corporation tax rate is 15.0 %, plus a 5.5 % solidarity
surcharge on corporation tax.
The calculation of foreign income taxes is based on the laws and provisions applicable in the individual countries.
The income tax rates applied to foreign companies vary from 0.0 % to 40.0 %.
Deferred and current income tax liabilities are offset against the corresponding tax assets if they exist in the same
fiscal territory and have the same nature and maturity.
S H A R E - B A S E D PAY M E N T S
All share-based payment schemes in the Group are payment schemes paid in cash or via equity instruments.
For transactions with cash compensation, the resulting liability for the Group is charged to expenses at its fair
value as at the date of the performance of the service by the beneficiary. Until payment of the liability, the fair
value of the liability is remeasured at every closing date and all changes in the fair value are recognised through
profit and loss.
For equity settled transactions the fair value of the awards granted is recognised under staff costs with a corresponding direct increase in equity. The fair value is determined at the point when the awards are granted and
spread over the vesting period during which the employees become entitled to the awards.
The fair value of the awards granted is measured using option valuation models, taking into account the terms and
conditions upon which the awards were granted. The amount to be included under staff costs is adjusted to reflect
the actual number of share options that vest except where forfeiture is due only to market-based performance
conditions not meeting the thresholds for vesting.
SUMMARY OF SELEC TED ACCOUNTING AND ME A SUREMENT ME THODS
The table below lists the key accounting and measurement methods used by the TUI Group.
SUMMARY OF SELECTED MEASUREMENT BASES
Item in the statement of financial position
Assets
Goodwill
Other intangible assets with indefinite useful lives
Other intangible assets with definite useful lives
Property, plant & equipment
Equity accounted investments
Financial assets
Loans and receivables
Held to maturity
Held for trading / Derivatives
Available for sale
Inventory
Trade and other receivables
Liabilities and Provisions
Loans and borrowings
Provision for pensions
Other provisions
Non-derivative financial liabilities
Derivative financial liabilities
Payables, trade and other liabilities
Measurement base
At cost (subsequent measurement: impairment test)
At cost (subsequent measurement: impairment test)
At amortised cost
At amortised cost
At cost as adjusted for post-acquisition changes in the Group’s
share of the investment’s net assets
At amortised cost
Not applicable
At fair value
Fair value (with gains or losses recognised within other
comprehensive income) or at cost
Lower of cost and net realisable value
At amortised cost
At cost
Lower of cost and fair value less cost of disposal
At amortised cost
Projected unit credit method
Present value of the settlement amount
At amortised cost
At fair value
At amortised cost
NOTES
197
198
NOTES
Key estimates and judgements
The presentation of the assets, liabilities, provisions and contingent liabilities shown in the consolidated financial
statements is based on estimates and judgements. Any uncertainties are appropriately taken into account in
determining the values.
All estimates and judgements are based on the conditions and assessments as at the balance sheet date. In
evaluating the future development of business, reasonable assumptions were made regarding the expected
future economic environment in the business areas and regions in which the Group operates.
Estimates and judgements that may have a material impact on the amounts reported for assets and liabilities in
the TUI Group are mainly related to the following balance sheet-related facts and circumstances:
• Establishment of assumptions in the framework of impairment tests, in particular for goodwill
• Determination of the fair values in the framework of acquisitions of companies and determination of the useful
lives of acquired intangible assets
• Determination of useful lives and residual carrying amounts of property, plant and equipment
• Determination of actuarial aerumptions to measure pension obligations
• Recognition and measurement of other provisions
• Recoverability of future tax savings from tax losses carried forward and tax-deductible temporary differences
• Measurement of tax risks
• Recoverable amounts of touristic prepayments
Other estimates and judgements relate to the determination of the recoverable amount in the framework of impairment tests for equity accounted investments and the determination of the fair value of financial instruments,
in particular the investment in Hapag-Lloyd AG .
Details of the fair value measurement of the investment in Hapag-Lloyd AG and a sensitivity analysis are disclosed
in Note 44. Details of the impairment are given in Note 19.
Despite careful preparation of the estimates, actual developments may deviate from these. In such cases, the
assumptions and the carrying amounts of the assets and liabilities concerned, if necessary, are adjusted accordingly. As a matter of principle, changes in estimates are taken into account in the financial year in which the changes
have occurred and in future periods.
GOODWILL
The goodwill reported as at 30 September 2015 had a carrying amount of € 3,220.4 m (previous year € 3,136.2 m).
Following the merger of TUI AG and TUI Travel PLC , the goodwill that was allocated to the former TUI Travel
sector was reallocated to the newly created segments. In reallocating goodwill, judgement have been made
regarding the methodology and valuation assumptions used to determine the relative values of the newly created
segments. The determination of the recoverable amount of a CGU for the annual impairment test requires estimates
and judgement with regard to the methodology used and the assumptions, which may have a considerable effect on
the recoverable amount and the level of a potential impairment. They relate, in particular, to the weighted average
cost of capital ( WACC ) after income taxes, used as the discounting basis, the growth rate in perpetuity and the
forecasts for future cash flows including the underlying budget assumptions based on corporate planning. Changes
in these assumptions may have a substantial impact on the recoverable amount and the level of a potential
impairment.
Detailed disclosures about the reallocation of the goodwill of the former TUI Travel sector and the impairment testing and the methods and assumptions used are provided in the section on “Goodwill and other intangible assets”
in the section on “Accounting and measurement methods”.
A C Q U I S I T I O N O F C O M PA N I E S A N D I N TA N G I B L E A S S E T S
In accounting for business combinations, the identifiable assets, liabilities and contingent liabilities acquired have
to be measured at their fair values. In this context, cash flow-based methods are regularly used. Depending on
the assumptions underlying such methods, different results may be produced. In particular, some judgement is
required in estimating the economic useful lives of intangible assets and determining the fair values of contingent
liabilities.
Detailed information on acquisitions of companies or useful lives of intangible assets is provided in the section
“Acquisitions – divestments – discontinued operation” in the chapter on “Principles and methods of consolidation”
and in the section on “Goodwill and other intangible assets” of the section “Accounting and measurement methods”.
The measurement of wear-and-tear property, plant and equipment items entails estimates. The carrying amount
of property, plant and equipment as at 30 September 2015 totals € 3,629.6 m (previous year € 2,836.0 m). In order
to review the amounts carried, an evaluation is carried out on an annual basis to assess whether there are any
indications of a potential impairment. These indications relate to a number of areas and factors, e. g. the market-related or technical environment but also physical condition. If any such indication exists, management must
estimate the recoverable amount on the basis of expected cashflows and appropriate interest rates. Moreover,
essential estimates and judgements relate to the definition of economic useful lives as well as the residual amounts
of items of property, plant and equipment which may be recovered.
More detailed information on the useful lives and residual values of property, plant and equipment items is provided
in the section “Property, plant and equipment” in the chapter on “Accounting and measurement methods”.
PENSION PROVISIONS
As at 30 September 2015, the carrying amount of the provisions for pensions and similar obligations totals
€ 1,146.9 m (previous year € 1,274.5 m). For those pension plans, where the plan assets exceed the obligation,
other assets amounting to € 15.2 m are shown as at 30 September 2015 (prior year € Nil).
In order to determine the obligations under defined benefit pension schemes, actuarial calculations are used which
depend on underlying assumptions concerning life expectancy and the discount rate. In terms of the estimation
of the discount rate used, there has been a change as at 30 September 2015 that is explained in the section
“Changes in estimates”.
At the balance sheet date, plan assets total € 2,302.1 m (previous year € 1,980.0 m). As assets classified as plan
assets are never available for short-term sale, the fair values of these plan assets may change significantly up to
the realisation date. The interest rate used to discount the liability is also used to determine the expected return
on plan assets.
Detailed information on actuarial assumptions is provided in Note 32.
OTHER PROVISIONS
As at 30 September 2015, other provisions of € 1,209.7 m (previous year € 1,072.6 m) are shown. When recognising
and measuring provisions, assumptions are required about probability of occurrence, maturity and level of
risk. Provisions are recognised if a past event has resulted in a current legal or constructive obligation, if an
outflow of assets is probable in order to meet that obligation, and if a reliable estimate can be made of the
amount of the liability.
NOTES
199
200
NOTES
Determining whether a current obligation exists is usually based on estimates by internal or external experts. The
amount of provisions is based on expected expenses, and is either calculated by assessing the specific case in the
light of empirical values, outcomes from comparable facts and circumstances or potential bandwidths, or else
estimated by experts. Due to the uncertainties associated with assessment, actual expenses may deviate from
estimates so that unexpected charges may result.
More detailed information on other provisions is offered in the Notes to the statement of financial position under
Note 33.
D E F E R R E D TA X A S S E T S
As at 30 September 2015, deferred tax assets totalling € 330.7 m (previous year € 235.9 m) were recognised. Prior
to offsetting against deferred tax liabilities, deferred tax assets total € 682.7 m, including an amount of € 239.4 m
(previous year € 135.0 m) for capitalised losses carried forward. The assessment of the usability of deferred tax
assets is based on the ability of the respective Group company to generate sufficient taxable income. TUI therefore
assesses as at every balance sheet date whether the recoverability of expected future tax savings is sufficiently
probable in order to recognise deferred tax assets. The assessment is based on various factors including internal
forecasts regarding the future tax asset situation of the Group company. If the assessment of the recoverability
of future deferred tax claims changes, impairments may be recognised, if necessary, for the deferred tax assets.
More detailed information on deferred tax assets is available in the Notes to the statement of financial position
under Note 22.
C U R R E N T I N C O M E TA X E S
The Group is liable to pay income taxes in various countries. Key estimates are required when determining income
tax liabilities, including the probability, the timing and the size of any amounts that may become payable. For certain
transactions and calculations the final tax charge cannot be determined during the ordinary course of business.
After taking appropriate external advise, the Group makes provisions or discloses contingencies for uncertain tax
positions based on the probable or possible level of additional taxes that might be incurred. The level of obligations for expected tax audits is based on an estimation of whether and to what extent additional income taxes will
be due. Judgements are corrected, if necessary, in the period in which the final tax charge is determined.
Detailed information on the contingency due to German trade tax is available in the Notes to the statement of
financial position under Note 40.
R E C O V E R A B L E A M O U N T S O F T O U R I S T I C P R E PAY M E N T S
At 30 September 2015, trade receivables and other assets include touristic prepayments of €966.6m (previous
year € 895.8m). The assessment of the recoverable amounts of touristic prepayments made to hoteliers requires
judgement about the volumes of future trading with hoteliers and the credit worthiness of those hoteliers. To
assess the recoverablity of touristic prepayments, TUI considers the financial strength of those hoteliers, the
quality of the hotels as well as the demand for each hotel and the touristic destination during the past and in
coming seasons.
C H A N G E S I N E S T I M AT E S
The discount rate used for discounting pension obligations is based on an index of first-class corporate bonds.
This far, the yield structure resulting from that index has been extrapolated on the basis of the yield curves for
various almost risk-free bonds, taking account of an appropriate risk mark-up reflecting the term of the obligation.
The risk-free bonds were German government bonds and zero-coupon euro-denominated interest rate swaps.
Against the backdrop of strongly diverging interest rates in the Eurozone in the period under review, the yield
structures of these bonds currently vary strongly. However, taking account of the fact that a large majority of
pension obligations within the Eurozone are held in Germany, the extrapolation of the yield structure will exclusively
be based on German government bonds from 30 September 2015. The change in this estimate will cause the
discount rate to rise by 25 basis points. As a result, provisions for pensions and similar obligations will decline by
€ 30.6 m, while deferred tax assets will decrease by € 9.5 m and equity will rise by € 21.1 m outside profit and loss.
Segment Reporting
Due to the higher discount rate, the net interest on the net defined benefit liability for the next financial year will
increase accordingly. Applying the same estimates as in the past, the net interest for the pension plans concerned
would have been € 12.7 m for the financial year 2015 / 16. Using the changed estimates, the expected net interest
for these plans increases to € 13.9 m for the next financial year.
Segment Reporting
Notes on the segments
The identification of operating segments is based on the internal organisational and reporting structure primarily
built around the different products and services as well as a geographical structure within the TUI Group. Allocation
of individual organisational entities to operating segments is exclusively based on economic criteria, irrespective of
the participation structure under company law. The segments are independently managed by those in charge,
who regularly receive separate financial information for each segment. They regularly report to the Group Executive
Committee, which consists of seven Executive Board members and five other executives. The legally binding decision
regarding the use of resources is taken by the Executive Board. The TUI Group Executive Board has therefore
been identified as the Chief Operating Decision Maker (CODM ) in accordance with IFRS 8.
Due to the merger between TUI AG and TUI Travel PLC , the TUI Group changed its organisational structure in
financial year 2014 / 15. With effect from 31 March 2015, the previously used reporting structure according to
IFRS 8 was adjusted to reflect the changed control concept of the new TUI Group.
Prior to the merger with TUI Travel PLC , TUI Travel was a reportable segment, managed as a separate entity from
TUI Group’s perspective. After the merger, the services offered by TUI AG and TUI Travel PLC were integrated
and a new organisational structure was created. The previous segments TUI Travel (comprised of the four businesses
Mainstream, Specialist & Activity, Accommodation & Destinations and Other), TUI Hotels & Resorts and Cruises
have been replaced by the following segments:
•
•
•
•
•
•
•
•
•
Northern Region
Central Region
Western Region
Hotels & Resorts
Cruises
Other Tourism
Specialist Group
Hotelbeds Group
LateRooms Group
The Northern Region segment comprises the tour operators and airlines as well as the cruise business in the UK ,
Ireland and the Nordic countries. This segment also comprises the strategic Canadian venture Sunwing and the
joint venture TUI Russia.
The Central Region segment comprises the tour operators and airlines in Germany and tour operators in Austria,
Poland and Switzerland.
NOTES
201
202
NOTES
Segment Reporting
The Western Region segment comprises the tour operators and airlines in Belgium and the Netherlands and tour
operators in France.
The Hotels & Resorts segment comprises all Group-owned hotels and hotel shareholdings of the TUI Group. The
hotel activities of the former Travel Sector have also been allocated to the Hotels & Resorts segment.
The Cruises segment consists of Hapag-Lloyd Kreuzfahrten and the joint venture TUI Cruises, as before.
The Other Tourism segment comprises the French commercial airline Corsair and, in particular, central tourism
functions such as the flight control and information technology.
The Specialist Group segment comprises the specialist tour operators previously carried under the designation
Specialist & Activity.
The Hotelbeds Group segment was previously included in the Accommodation & Destinations business and
comprises the B2B hotel portals and incoming agencies.
Apart from the segments listed above, the “All other segments” category continues to be shown. It carries, in
particular, the corporate centre functions of TUI AG and the interim holdings as well as the Group’s real estate
companies. The corporate centre functions of TUI Travel PLC , previously included in TUI Travel, have also been
allocated to this segment.
The segments Northern Region, Central Region, Western Region, Hotels & Resorts, Cruises and Other Tourism constitute the Tourism Business. The segments Specialist Group, Hotelbeds Group and Other segments comprise other,
non-core businesses not related to Tourism. The LateRooms Group operates the online hotel portals L ateRooms,
AsiaRooms and MalaPronta, offering accommodation services to final consumers. It has been classified as a discontinued operation. For more detailed information, we refer to the section on “Discontinued operation” under
“Accounting principles” and the chapter on “Acquisitions, divestments and discontinued operations”.
The prior year numbers have been restated to reflect the new reporting structure.
Notes to the segment data
The selection of segment data presented is based on the regular internal reporting of segmented financial indicators
to the Executive Board. Segment reporting discloses in particular the performance indicators EBITA and underlying EBITA , since these indicators are used for value-oriented corporate management and thus represent the
consolidated performance indicator within the meaning of IFRS 8.
The TUI Group defines EBITA as earnings before interest, income taxes and goodwill impairments. EBITA includes
amortisation of other intangible assets. EBITA does not include measurement effects from interest hedges and
the proportionate result and measurement effects from container shipping, as the stake in Hapag-Lloyd AG is a
financial investment rather than an operative stake from TUI AG ’s perspective.
Segment Reporting
In contrast to EBITA , the underlying EBITA has been adjusted for gains on disposal of financial investments,
expenses in connection with restructuring measures according to IAS 37, all effects of purchase price allocations,
ancillary acquisition cost and conditional purchase price payments and other expenses for and income from one-off
items. The one-off items carried as adjustments are income and expense items impacting or distorting the assessment of the operating profitability of the segments and the Group due to their levels and frequencies. These
one-off items include, in particular, major restructuring and integration expenses not meeting the criteria of
IAS 37, major expenses for litigation, profits and losses from the sale of aircraft and other material business
transactions with a one-off character.
Alongside this indicator, segment reporting is voluntarily extended to include EBITDA and EBITDAR . In the TUI
Group EBITDA is defined as earnings before interest, income taxes, goodwill impairments and amortisation and
write-ups of other intangible assets, depreciation and write-ups of property, plant and equipment and investments. The amounts of amortisation and depreciation represent the net balance including write-backs. For the
reconciliation from EBITDA to the indicator EBITDAR , long-term leasing and rental expenses are eliminated.
Internal and external turnover, depreciation and amortisation, impairments on other intangible assets (excluding
goodwill), property, plant and equipment and investments as well as the share of result of joint ventures and
associates are likewise shown for each segment, as these amounts are included when measuring EBITA . As a rule,
inter-segment business transactions are based on the arm’s length principle, as applied in transactions with third
parties. No single external customer accounts for 10 % or more of turnover.
Assets and liabilities per segment are not included in the reporting to the Executive Board and are therefore not
shown in segment reporting. The only asset-related segmental indicator reported to the Executive Board is capital
expenditure, which therefore is also disclosed in this segment reporting. The amounts shown represent cash capital
expenditure in intangible assets and property, plant and equipment in line with the indicator reported internally.
Financing, like taken loans and finance lease agreements, are not included in this indicator. Therefore the amount
of the capital expenditure does not coincide with the additions to intangible assets and property, plant and
equipment. A reconciliation of the investments is presented in a separate table.
Depreciation, amortisation and write-backs relate to non-current assets that are split geographically and do not
include goodwill impairments.
The non-current assets, which are split geographically, contain other intangible assets, investment property,
property, plant and equipment and other non-current assets that do not meet the definition of financial instruments.
NOTES
203
204
NOTES
Segment Reporting
Segment indicators
TURNOVER BY SEGMENT
2014 / 15
€ million
External
Group
Total
External
restated
Northern Region
Central Region
Western Region
Hotels & Resorts
Cruises
Other Tourism
Consolidation
Tourism
Specialist Group
Hotelbeds Group
All other segments
Consolidation
Total
7,014.9
5,601.8
2,903.4
574.8
273.3
496.1
–
16,864.3
1,835.1
1,227.1
85.1
–
20,011.6
69.7
20,081.3
130.3
49.6
9.2
677.4
–
3.5
– 734.7
135.3
–
173.2
77.7
– 386.2
–
–
–
7,145.2
5,651.4
2,912.6
1,252.2
273.3
499.6
– 734.7
16,999.6
1,835.1
1,400.3
162.8
– 386.2
20,011.6
69.7
20,081.3
6,200.8
5,426.0
2,970.2
515.9
281.0
478.4
–
15,872.3
1,625.5
999.7
39.3
–
18,536.8
74.8
18,611.6
Group
restated
2013 / 14
Total
restated
98.5
64.5
24.6
648.6
1.0
14.0
– 721.2
130.0
–
220.8
71.2
– 422.0
–
–
–
6,299.3
5,490.5
2,994.8
1,164.5
282.0
492.4
– 721.2
16,002.3
1,625.5
1,220.5
110.5
– 422.0
18,536.8
74.8
18,611.6
E B I TA A N D U N D E R LY I N G E B I TA B Y S E G M E N T
2014 / 15
2013 / 14
restated
2014 / 15
Underlying EBITA
2013 / 14
restated
505.3
72.9
56.6
195.7
80.5
– 26.4
884.6
38.5
82.3
– 140.1
865.3
– 68.1
797.2
428.3
140.3
61.6
199.1
24.2
– 27.6
825.9
26.6
29.1
– 104.4
777.2
– 4.7
772.5
530.3
103.5
68.8
234.6
80.5
– 21.1
996.6
56.2
116.8
– 100.6
1,069.0
– 8.5
1,060.5
398.3
163.0
81.7
202.8
9.7
– 22.3
833.2
45.5
101.7
– 110.5
869.9
– 2.8
867.1
EBITA
€ million
Northern Region
Central Region
Western Region
Hotels & Resorts
Cruises
Other Tourism
Tourism
Specialist Group
Hotelbeds Group
All other segments
Total
Segment Reporting
R E C O N C I L I AT I O N T O E A R N I N G S B E F O R E I N C O M E TA X E S O F T H E C O N T I N U I N G O P E R AT I O N S
OF THE TUI GROUP
2014 / 15
2013 / 14
restated
1,069.0
5.2
– 64.8
– 76.2
– 67.9
865.3
0.9
– 147.1
– 183.7
535.4
869.9
3.7
– 43.6
– 71.8
19.0
777.2
– 54.2
–
– 224.3
498.7
€ million
Underlying EBITA of continuing operations
Result on disposal *
Restructuring expense *
Expense from purchase price allocation *
Expense (previous year income) from other one-off items *
EBITA of continuing operations
Profit (previous year loss) on Container Shipping measured at equity
Loss on measurement of financial investment in Container Shipping
Net interest expense and expense from measurement of interest hedges
Earnings before income taxes of continuing operations
* For a description of the adjustments please refer to the management report.
EBITDA AND EBITDAR BY SEGMENT
EBITDA
2014 / 15
2013 / 14
restated
608.4
101.2
78.6
308.7
97.6
24.2
–
1,218.7
86.0
121.7
– 64.4
–
1,362.0
– 12.1
1,349.9
532.1
162.8
84.9
280.3
37.3
– 2.9
–
1,094.5
70.1
63.9
– 64.9
–
1,163.6
7.1
1,170.7
€ million
Northern Region
Central Region
Western Region
Hotels & Resorts
Cruises
Other Tourism
Consolidation
Tourism
Specialist Group
Hotelbeds Group
All other segments
Consolidation
Total
Long-term leasing and
rental expenses
2014 / 15
2013 / 14
365.0
206.5
144.5
116.8
10.7
29.1
– 5.6
867.0
60.7
18.0
374.4
– 451.9
868.2
1.0
869.2
341.7
139.9
128.6
110.1
38.8
26.2
– 15.9
769.4
49.4
16.3
320.0
– 357.4
797.7
1.0
798.7
EBITDAR
2014 / 15
2013 / 14
restated
973.4
307.7
223.1
425.5
108.3
53.3
– 5.6
2,085.7
146.7
139.7
310.0
– 451.9
2,230.2
– 11.1
2,219.1
873.8
302.7
213.5
390.4
76.1
23.3
– 15.9
1,863.9
119.5
80.2
255.1
– 357.4
1,961.3
8.1
1,969.4
NOTES
205
206
NOTES
Segment Reporting
O T H E R S E G M E N TA L I N F O R M AT I O N
Amortisation (+) /
write-backs (–) of intangible
assets and depreciation (+) /
write-backs (–) of property,
plant and equipment
and investments
2014 / 15
2013 / 14
restated
€ million
Northern Region
Central Region
Western Region
Hotels & Resorts
Cruises
Other Tourism
Tourism
Specialist Group
Hotelbeds Group
All other segments
Total
103.1
28.3
22.0
113.0
17.1
50.6
334.1
47.5
39.4
75.7
496.7
56.0
552.7
103.8
22.5
23.3
81.2
13.1
24.7
268.6
43.5
34.8
39.5
386.4
11.8
398.2
Thereof impairments (+) /
write-backs (–)
2014 / 15
2013 / 14
5.3
4.4
0.4
25.6
–
23.2
58.9
1.0
–
0.6
60.5
49.1
109.6
18.3
0.3
–
0.3
–
–
18.9
0.2
0.2
– 6.4
12.9
–
12.9
Share of result of joint
ventures and associates
2014 / 15
2013 / 14
restated
23.7
3.1
–
44.0
68.1
–
138.9
–
4.7
–
143.6
–
143.6
– 0.3
3.1
–
40.7
31.3
– 0.2
74.6
0.6
5.6
0.2
81.0
–
81.0
Capital expenditure
2014 / 15
2013 / 14
restated
65.3
23.6
23.6
167.3
86.7
82.5
449.0
35.7
38.4
60.0
583.1
11.2
594.3
70.5
24.9
22.3
133.6
10.4
39.0
300.7
32.7
27.8
12.7
373.9
11.8
385.7
R E C O N C I L I AT I O N O F C A P I TA L E X P E N D I T U R E
2014 / 15
2013 / 14
restated
594.3
211.0
477.4
232.1
8.6
385.7
–
161.5
216.5
39.2
1,523.4
802.9
€ million
Capital expenditure
Debt financed investments
Finance leases
Advance payments
Additions to the group of consolidated companies
Additions to other intangible assets, investment property
and property, plant and equipment
KE Y FIGURES BY REGION
€ million
External turnover
by customer
2014 / 15
2013 / 14
restated
Germany
Great Britain
Spain
Other Europe
Rest of the world
Total
5,033.0
6,824.3
483.4
6,148.4
972.8
619.4
20,081.3
4,860.6
6,010.3
164.4
6,222.8
875.1
478.4
18,611.6
Thereof external
turnover from
discontinued operation
2014 / 15
2013 / 14
0.3
63.1
0.2
1.9
1.2
3.0
69.7
0.5
63.1
0.3
2.9
1.9
6.1
74.8
Non-current assets
2014 / 15
2013 / 14
restated
581.3
2,054.7
604.4
499.3
533.8
462.9
4,736.4
374.4
1,474.6
581.2
552.6
500.9
495.6
3,979.3
Thereof non-current
assets from discontinued
operation
2014 / 15
2013 / 14
–
11.4
–
–
–
–
11.4
–
27.1
–
–
–
9.8
36.9
Notes to the Consolidated Income Statement
The financial year 2014 / 15 showed a strong growth in the TUI Group’s earnings position. Operating growth was
driven by the very good performance of Northern Region, Hotels & Resorts and Cruises. The significant increase
in the result from continuing operations reflected an improved operating performance, favourable effects of foreign
exchange conversion, a better interest result and lower tax charges following the merger with TUI Travel PLC .
(1) Turnover
Group turnover is mainly generated from tourism services. A breakdown of turnover into the segments is shown
in the segment reporting.
(2) Cost of sales and administrative expenses
The cost of sales relates to the expenses incurred in the rendering of tourism services. In addition to the expenses for
personnel, depreciation, amortisation, rental and leasing, they include all costs incurred by the Group in connection
with the provision and delivery of airline services, hotel accommodation and cruises as well as distribution costs.
Administrative expenses comprise all expenses incurred in connection with activities by the administrative
functions and break down as follows:
A D M I N I S T R AT I V E E X P E N S E S
2014 / 15
2013 / 14
restated
971.2
78.3
106.5
559.4
1,715.4
878.7
72.3
90.6
492.2
1,533.8
€ million
Staff cost
Lease, rental and leasing expenses
Depreciation, amortisation and impairments
Others
Total
Apart from foreign exchange effects, the year-on-year increase in administrative expenses in financial year 2014 / 15
mainly results from reorganisation and restructuring measures implemented in the reporting period, in particular
as a result of the rationalisation of the corporate head office, the planned integration of incoming agencies into
the source market organisations and the aggregation of the airlines. The reorganisation schemes in the Germany,
Benelux and Nordic source markets also resulted in higher administrative expenses compared to the prior year.
Further expenses particularly relate to impairments of VAT claims in an Italian subsidiary and the recognition of
provision for pending litigation in connection with the acquisition of the business of a Turkish hotel management
company.
NOTES
207
208
NOTES
The cost of sales and administrative expenses include the following expenses for rent and leasing, personnel and
depreciation / amortisation:
L E A S E , R E N TA L A N D L E A S I N G E X P E N S E S
2014 / 15
2013 / 14
restated
929.6
851.3
78.3
860.0
787.7
72.3
€ million
Lease, rental and leasing expenses
thereof cost of sales
thereof administrative expenses
Where rental and lease expenses for operating leases are directly related to the turnover generating activities,
these expenses are shown under the cost of sales. However, where rental and lease expenses are incurred in respect
of administrative buildings, they are shown under administrative expenses.
The year-on-year increase in lease, rental and leasing expenses mainly relates to lease expenses for aircraft. As
the lease agreements for aircraft have been denominated in US dollars, leasing expenses have risen due to the
exchange rates movements. Moreover, lease payments for aircraft have increased slightly year-on-year due to
changes in the composition of the aircraft fleet. This increase offsets the decline in leasing expenses for cruise
ships driven by the acquisition of Europa 2, which had previously been leased.
S TA F F C O S T S
2014 / 15
2013 / 14
restated
2,233.6
1,426.6
807.0
482.0
317.8
164.2
2,715.6
2,083.7
1,351.2
732.5
362.5
216.3
146.2
2,446.2
€ million
Wages and salaries
Social security contributions, pension costs and benefits
Total
Pension costs include among others service cost for defined benefit obligations. The net interest expense from the
defined benefit obligations is included under financial expenses due to its financing nature. A detailed presentation
of pension obligations is provided in Note 32.
Beside foreign exchange effects, the increase in the expenses for wages and salaries versus the prior year mainly
results from expenses in connection with the restructuring measures outlined in the explanatory information on
administrative expenses.
In the prior year, social security contributions, pension costs and other benefits were reduced by an income
amounting to € 81.0 m from the curtailment of pension plans, included within cost of sales. Apart from that effect
and the restructuring expenses incurred in financial year 2014 / 15, primarily the development of the Euro exchange
rate caused a year-on-year increase in expenses due to translation effects.
The average annual headcount (excluding apprentices) developed as follows:
AVE R AGE ANNUAL HE ADCOUNT IN THE FINANCIAL YE AR (E XCL . APPRE NTICE S)
Average annual – Continuing operations
Average annual – Discontinued operations
Total
2014 / 15
2013 / 14
restated
70,943
399
71,342
70,143
552
70,695
2014 / 15
2013 / 14
restated
436.3
331.5
104.8
59.2
57.5
1.7
495.5
373.4
282.9
90.5
21.6
21.5
0.1
395.0
D E P R E C I AT I O N /A M O R T I S AT I O N / I M PA I R M E N T
€ million
Depreciation and amortisation
Impairment of other intangible assets, property, plant and equipment and investment property
Total
Depreciation and amortisation includes the amortisation of other intangible assets, depreciation of property,
plant and equipment as well as write-downs of investment property. The uniform Group-wide useful lives that
drive depreciation and amortisation and the principles for impairment are outlined in the section “Accounting and
measurement”.
The impairment charge mainly comprises an impairment of € 26.4 on property, plant and equipment in Tenuta di
Castelfalfi S.p.A. The main impairment of intangible assets included an impairment charge of € 24.9 m for software.
In the previous year, a major component of the impairment of property, plant and equipment of € 18.2 m related
to the impairment of the cruise ship Island Escape.
(3) Other income / other expenses
OTHER INCOME /OTHER EXPENSES
€ million
Other income
Other expenses
Total
2014 / 15
2013 / 14
51.2
8.0
43.2
35.9
2.1
33.8
NOTES
209
210
NOTES
In the financial year 2014 / 15, other income mainly results from the profit that arose from the sale of a Riu Group
hotel (€ 16.9 m) sold in Q1 2014 / 15 and from the sale of two Greek hotel companies in Q3 2014 / 15 (€ 10.1 m).
Income was also generated from the sale of the companies in the PE AK Adventure Travel Group (€ 4.4 m) and the
sale of two hotels in the Specialist Group as well as sale-and-lease-back transactions of aircraft. Further income
relates to the recycling of cumulative foreign exchange gains previously carried in equity outside profit and loss
resulting from a capital reduction in a subsidiary.
Other income recognised in the prior year mainly related to profits from sale-and-lease-back transactions of
aircraft and profits from the disposal of real estate. Additional income resulted from the sale of a hotel company
in Switzerland and from gains on disposal from the sale of investments.
Other expenses recognised in the financial year 2014 / 15 mainly resulted from foreign exchange losses in connection
with capital reductions and liquidations of subsidiaries and from losses from the sale of aircraft assets.
(4) Goodwill impairment
In financial year 2014 / 15, and also in the prior year, the implementation of impairment tests according to IAS 36
did not result in any goodwill impairments for the TUI Group’s cash generating units.
(5) Financial income
FINANCIAL INCOME
2014 / 15
2013 / 14
restated
1.6
1.5
3.1
20.3
1.0
21.3
3.9
9.6
37.9
2.0
0.4
2.4
25.3
–
25.3
9.1
–
36.8
€ million
Income from non-consolidated Group companies including income from profit
transfer agreements
Income from other investments
Income from investments
Other interest and similar income
Income from the measurement of interest rate hedges
Interest income
Income from the measurement of other financial instruments
Foreign exchange gains on financial items
Total
(6) Financial expenses
FINANCIAL EXPENSES
2014 / 15
2013 / 14
restated
34.4
153.4
17.2
205.0
147.1
6.6
11.4
370.1
38.6
207.1
3.9
249.6
–
43.6
7.7
300.9
€ million
Net interest expenses from defined benefit pension plans
Other interest and similar expenses
Expenses relating to the measurement of interest rate hedges
Interest expenses
Expenses relating to the measurement of the investment in Hapag-Lloyd AG
Expenses relating to the measurement of other financial instruments
Foreign exchange losses on financial items
Total
The year-on-year reduction in other interest and similar expenses is attributable to changes in the structure of
financial liabilities. All convertible bonds were fully converted in financial year 2014 / 15. Accordingly, the interest
expense for convertible bonds declined by € 95.9 m. TUI AG also repaid a bank loan of € 100.0 m in August 2014.
As a result, the interest expense declined by a further € 12.9 m.
The reduction was partly offset by the impacts of the new funding scheme in connection with the merger between
TUI AG and TUI Travel PLC . The credit facility granted to TUI Travel was replaced by a credit facility granted to
TUI AG . The issuance costs for the credit facility of TUI Travel PLC previously carried as prepaid expenses of
€ 14.2 m were fully taken through profit and loss in the first quarter of 2014 / 15. The high-yield bond worth
€ 300.0 m issued by TUI AG in September 2014 resulted in interest expenses of € 13.5 m. In addition, the acquisition
of Europa 2 led to an increase in financial liabilities and a rise in interest expenses of € 9.9 m. Interest expenses also
rose by € 10.3 m due to the increase in finance lease liabilities.
In financial year 2014 / 15, expenses for the measurement of financial instruments mainly include an impairment
of the stake in Hapag-Lloyd AG , shown in a separate line in the table. For further details please refer to note 19.
In the previous year, expenses for the measurement of other financial instruments mainly resulted from the impairment of loans to TUI Russia.
(7) Share of results of joint ventures and associates
S H A R E O F R E S U LT O F J O I N T V E N T U R E S A N D A S S O C I AT E S
2014 / 15
2013 / 14
restated
36.5
7.6
28.9
127.4
11.8
115.6
144.5
29.9
59.5
– 29.6
80.4
24.0
56.4
26.8
€ million
Income from associated companies measured at equity
Expenses for associated companies measured at equity
Share of result of associates
Income from joint ventures measured at equity
Expenses for joint ventures measured at equity
Share of result of joint ventures
Total
NOTES
211
212
NOTES
The share of results of joint ventures and associates comprises the net profit for the year attributable to TUI Group.
The considerable increase in the share of results of joint ventures and associates is due to the commissioning of
cruise ships Mein Schiff 3 and Mein Schiff 4 by TUI Cruises in June 2014 and June 2015 and the improvement in
the operating performance of Riu Hotels and Sunwing Travel Group. Moreover, the prior year comparative figure
included losses generated by TUI Russia (€ 21.4 m) and container shipping (€ 38.9 m). In financial year 2014 / 15, no
losses were recognised for TUI Russia as this would have resulted in a negative carrying amount for the interests
in TUI Russia. Hapag-Lloyd AG , which had a negative profit contribution in the prior year, has been included under
financial assets available for sale since 2 December 2014.
In the financial year under review, and also in the prior year the share of results of joint ventures and associates
did not include any impairment charges.
(8) Income taxes
B R E A K D O W N O F I N C O M E TA X E S
2014 / 15
2013 / 14
restated
17.5
170.1
– 100.6
87.0
16.8
96.7
99.0
212.5
€ million
Current tax expense
in Germany
abroad
Deferred tax income (previous year tax expense)
Total
The increase in the current tax expenses is largely attributable to income taxes related to prior periods, which
created tax expenses of € 33.0 m in financial year 2014 / 15 whereas tax income of € 39.2 m had been generated in
the prior year.
The deferred tax income is mainly driven by a revaluation of deferred tax assets on losses carried forward in
Germany. TUI AG and Leibniz-Service GmbH entered a profit and loss transfer agreement which resulted in an
enlargement of the German tax group for income tax purposes. This led to an increase in the recoverability of
domestic losses carried forward of € 144.9 m. An offsetting effect amounting to € 30.7 m arose from the impairment of deferred tax assets on losses carried forward in the UK mainly due to the reassessment of planned
reorganisation measures following the merger.
In financial year 2014 / 15, total income taxes of € 87.0 m (previous year € 212.5 m) were derived from an “expected”
income tax expense that would have arisen if the statutory income tax rate of TUI AG as the parent company
(aggregate income tax rate) had been applied to earnings before tax as follows:
R E C O N C I L I AT I O N O F E X P E C T E D T O A C T U A L I N C O M E TA X E S
2014 / 15
2013 / 14
restated
535.4
166.0
– 44.5
– 6.9
– 130.0
165.4
– 110.5
6.8
39.7
1.0
87.0
498.7
157.1
– 44.0
– 1.9
– 74.8
93.7
65.9
23.5
– 7.5
0.5
212.5
€ million
Expected income tax (current year 31.0 %, previous year 31.5 %)
Variation from the difference between actual and expected tax rates
Changes in tax rates and tax law
Income not taxable
Expenses not deductible
Effects from loss carryforwards
Temporary differences for which no deferred taxes were recognised
Deferred and current tax relating to other periods (net)
Other differences
Income taxes
The increase in non-taxable income reflects the non-taxable positive results of joint ventures and associates.
Expenses which are not deductible increased, in particular, due to one-off effects in Germany such as the impairment
of the interests in container shipping.
The effects of losses carried forward mainly result from the enlargement of the German tax group for income tax
purposes. An offsetting effect arises from the impairment of deferred tax assets on losses carried forward in the UK .
(9) Result from discontinued operation
The result from discontinued operation shows the after tax result of the LateRooms Group, which is classified as
a discontinued operation. For further information please refer to the section “discontinued operation” within
“Acquisitions, divestments and discontinued operations”.
(10) Group profit for the year attributable to shareholders of TUI AG
The share in Group profit attributable to the TUI AG shareholders improved from € 90.4 m in the prior year to
€ 340.4 m in financial year 2014 / 15. Apart from the general improvement in the Group’s result, the increase is
attributable to the fact that non-controlling interests in TUI Travel PLC were only held until the merger between
TUI AG and TUI Travel PLC in December 2014.
NOTES
213
214
NOTES
(11) Group profit for the year attributable to non-controlling interests
G R O U P P R O F I T F O R T H E Y E A R AT T R I B U TA B L E T O N O N - C O N T R O L L I N G I N T E R E S T
2014 / 15
2013 / 14
restated
2.3
– 0.1
88.8
91.0
– 3.1
1.8
0.1
– 50.6
39.2
2.5
–
66.7
69.2
0.7
1.6
0.1
108.8
180.4
€ million
Central Region
Western Region
Hotels & Resorts
Tourism
Specialist Group
Hotelbeds Group
All other segments
Formerly Travel ( TUI Travel PLC – Group)
Total
Since the merger of TUI AG and TUI Travel PLC in December 2014 the result of TUI Travel PLC – Group is no
longer attributable to non-controlling interests. Accordingly only the losses of the winter season have been attributed
to minorities in the current year. The Group result for the year attributable to non-controlling interests in the
Hotels & Resorts segment mainly relates to the RIUSA II Group.
(12) Earnings per share
In accordance with IAS 33, basic earnings per share are calculated by dividing the Group profit for the year attributable to TUI AG shareholders by the weighted average number of registered shares outstanding during the
financial year under review. The average number of shares is derived from the total number of shares at the beginning
of the financial year (286,561,143 shares), the shares resulting from the capital increase (195,412,121 shares on a
pro rata temporis basis), the employee shares issued on a pro rata temporis basis (121,251 new shares for 331 days)
and the conversion of bonds into new shares (33,263,465 shares on a pro rata temporis basis). The prorated effect
of 2,243,264 own shares, held by an employee benefit trust of TUI Travel Ltd., was deducted.
The dividend on the hybrid capital is deducted from Group profit for the year attributable to shareholders of
TUI AG until cancellation as of 24 March 2015, since the hybrid capital represents equity but does not constitute
Group profit attributable to TUI AG shareholders until cancellation.
EARNINGS PER SHARE
Group profit for the year attributable to shareholders of TUI AG Dividend effect on hybrid capital
= Adjusted Group profit for the year attributable to shareholders of TUI AG Weighted average number of shares
Basic earnings per share
– Basic earnings per share from continuing operations
– Basic earnings per share from discontinued operation
2014 / 15
2013 / 14
restated
340.4
– 10.9
329.5
513,114,716
0.64
0.77
– 0.13
90.4
– 23.2
67.2
262,595,131
0.26
0.29
– 0.03
2014 / 15
2013 / 14
restated
€ million
€ million
329.5
–
67.2
43.6
€ million
329.5
513,114,716
–
6,384,006
519,498,722
0.63
0.76
– 0.13
110.8
262,595,131
57,163,090
–
319,758,221
0.26
0.29
– 0.03
€ million
€ million
€ million
€
€
€
DILUTED EARNINGS PER SHARE
Adjusted Group profit for the year attributable to shareholders of TUI AG Interests savings from convertible bonds Diluted and adjusted share in Group profit for the year attributable to
shareholders of TUI AG Weighted average number of shares
Diluting effect from assumed exercise of conversion inputs
Diluting effect from assumed exercise of share awards
Weighted average number of shares (diluted)
Diluted earnings per share
– Diluted earnings per share from continuing operations
– Diluted earnings per share from discontinued operation
€
€
€
As a rule, a dilution of earnings per share occurs when the average number of shares increases due to the addition
of the issue of potential shares. In the period under review, these effects are driven by share-based payment
schemes. The conversion rights held in previous years fully expired in financial year 2014 / 15. The potential shares
from convertible bonds, which had to be taken into account in financial year 2013 / 14, did not create a dilution
effect in the prior year as they would have increased earnings per share. Basic and diluted earnings per share were
therefore identical in the prior year.
NOTES
215
216
NOTES
(13) Taxes attributable to other results
TA X E F F E C T S R E L AT I N G T O O T H E R C O M P R E H E N S I V E I N C O M E
2014 / 15
€ million
Gross
Tax effect
Net
Gross
Tax effect
2013 / 14
restated
Net
Available for sale financial
instruments
Cash flow hedges
Remeasurements of pension
provisions and related fund assets
Changes in the measurement
of companies measured at equity
outside profit or loss
– 221.7
–
– 221.7
– 115.1
–
– 115.1
–
– 221.0
–
27.1
–
– 193.9
– 0.9
119.1
–
– 20.8
– 0.9
98.3
82.2
– 24.2
58.0
– 286.0
70.4
– 215.6
22.1
– 338.4
–
2.9
22.1
– 335.5
14.3
– 268.6
–
49.6
14.3
– 219.0
In addition, income taxes worth € 17.7 m (previous year € 35.4 m) included outside profit and loss were generated
in the period under review. They were recognised directly in equity.
Notes on the consolidated statement of financial position
(14) Goodwill
GOODWILL
2014 / 15
2013 / 14
Historical cost
Balance as at 1 Oct
Exchange differences
Additions
Disposals*
Reclassification as assets held for sale
Balance as at 30 Sep
3,590.6
95.6
1.6
–
– 9.0
3,678.8
3,421.6
146.5
27.0
4.5
–
3,590.6
Impairment
Balance as at 1 Oct
Disposals*
454.4
3.9
–
0.1
458.4
445.2
11.2
2.0
–
454.4
3,220.4
3,136.2
€ million
Carrying amounts as at 30 Sep
* Of which no disposals from changes in the group of consolidated companies
The increase in the carrying amount is mainly attributable to the translation of goodwill not reported in the TUI
Group’s functional currency into Euros.
In accordance with the rules of IAS 21, goodwill allocated to the individual segments and sectors was recognised
in the functional currency of the subsidiaries and subsequently translated when preparing the consolidated financial
statements. As with the treatment of other differences from the translation of annual financial statements of foreign
subsidiaries, differences due to exchange rate movements between the exchange rate at the date of acquisition
of the subsidiary and the exchange rate at the balance sheet date are taken directly to equity outside profit and
loss and are disclosed as a separate item. In financial year 2014 / 15, the carrying amount of goodwill increase by
€ 91.7 m (previous year increase of € 135.3 m) as a result of foreign exchange differences.
Prior to the merger of TUI AG with TUI Travel PLC , goodwill was allocated to the former TUI Travel Sector as a
whole. Due to the reorganisation of the reporting structure following the merger between TUI AG and TUI Travel PLC ,
that goodwill was allocated to the newly created segments based on their relative values. The relative values were
calculated as the ratios of the fair values of each newly created segment to the total amount of the fair values of
the newly created segments. The calculation of the fair values was based on the discounted cash flows, calculated
on the basis of the medium-term plan for TUI Travel PLC , prepared as at 30 September 2014. The reorganisation
of the reporting structure did not affect the cash generating units allocated to the Hotels & Resorts segment
prior to the merger between TUI AG and TUI Travel PLC . The goodwill allocated to these units therefore remained unchanged.
NOTES
217
218
NOTES
The following table provides a breakdown of the carrying amounts of goodwill by cash generating unit (CGU ):
G O O D W I L L P E R C A S H G E N E R AT I N G U N I T
€ million
Northern Region
Central Region
Western Region
Specialist Group
Hotelbeds Group
formerly TUI Travel ( TUI Travel PLC Group)
Riu
Robinson
Iberotel
Total
30 Sep 2015
30 Sep 2014
1,736.1
505.7
338.4
70.5
202.1
–
351.7
9.7
6.2
3,220.4
–
–
–
–
–
2,767.5
351.7
9.7
7.3
3,136.2
Impairment charges are recognised if the carrying amount of the tested unit plus the allocated goodwill exceeds
the recoverable amount. Goodwill was tested for impairment as at 30 June 2015, whilst in previous years it was as
at 30 September. The changed date for the goodwill impairment test is mainly attributable to the realignment of
the organisational structure due to the merger with TUI Travel PLC .
For all cash generating units, the recoverable amount was determined on the basis of fair value less costs of disposal.
The fair value was determined by discounting expected future cash inflows. This was based on the budget for Q4 of
the financial year under review, the medium-term plan for the entity under review, prepared as at 30 September 2015,
following deduction of income tax payments. Budgeted turnover and EBITA margins are based on empirical values
from prior financial years and expectations with regard to the future development of the market. The cash inflows
after the planning period are extrapolated on the basis of individual growth rates based on long-term business
expectations.
The discount rates are calculated as the weighted average cost of capital, taking account of the risks associated
with the cash generating unit on the basis of external capital market information. The cost of equity included in
the determination reflects the return expected by investors. The cost of borrowing is derived from the long-term
financing terms of comparable companies in the peer group.
The table below provides an overview of the assumptions used for determinating the fair values per CGU . It shows
the timeframe for the cash flow forecast, the growth rates used to extrapolate the cash flow forecast, and the
relevant valuation hierarchy according to IFRS 13. The table lists the main cash generating units to which goodwill
has been allocated. In the prior year, the fair value of the former CGU TUI Travel was determined on the basis of
the closing price of the TUI Travel share in its primary market, the London Stock Exchange.
A S S U M P T I O N S F O R C A L C U L AT I O N O F FA I R VA L U E I N F I N A N C I A L Y E A R 2 0 14 /15
Planning Growth rate
period in
revenues
years
in %
Northern Region
Central Region
Western Region
Riu
Robinson
Iberotel
Specialist Group
Hotelbeds Group
3.25
3.25
3.25
3.25
3.25
3.25
3.25
3.25
4.3
8.2
9.3
2.4
17.9
5.9
2.3
11.3
EBITA -
Margin
in %
Growth rate after
planning period in %
WACC in %
Level
6.8
2.8
3.1
24.1
17.3
18.4
2.8
6.0
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
7.25
7.25
7.25
6.75
6.75
6.75
7.25
7.25
3
3
3
3
3
3
3
3
A S S U M P T I O N S F O R C A L C U L AT I O N O F FA I R VA L U E I N F I N A N C I A L Y E A R 2 0 13 /14
Planning Growth rate
period in
revenues
years
in %
formerly TUI Travel
( TUI Travel PLC Group)
Riu
Robinson
Iberotel
3
3
3
3.6
4.2
3.4
EBITA -
Margin
in %
Growth rate after
planning period in %
WACC in %
Level
22.9
15.7
22.1
1.0
1.0
1.0
7.25
7.25
7.25
1
3
3
3
Goodwill was tested for impairment as at 30 June 2015. The test did not result in a requirement to recognise an
impairment. Neither an increase in WACC of 50 basis points nor a reduction in the growth rate in perpetuity of
50 basis points would have led to an impairment of goodwill.
NOTES
219
220
NOTES
(15) Other intangible assets
O T H E R I N TA N G I B L E A S S E T S
Concessions, industrial
property rights and similar
rights and values
Selfgenerated
software
Transport
and leasing
contracts
Customer
base
Payments
on account
Total
1,116.1
– 0.6
1,115.5
55.6
117.4
–
117.4
2.7
99.5
–
99.5
7.6
242.3
– 0.1
242.2
5.8
–
–
–
–
1,575.3
– 0.7
1,574.6
71.7
10.4
122.2
22.6
– 0.4
– 4.7
1,276.0
48.8
–
22.8
5.5
–
4.7
142.1
4.8
–
–
–
–
–
107.1
6.4
4.2
0.3
0.1
–
–
252.4
6.5
–
0.4
–
–
–
0.4
–
14.61
145.7
28.22
– 0.4
–
1,778.0
66.5
0.8
165.7
35.4
– 73.1
– 111.9
1,270.9
–
23.9
17.0
– 44.7
114.4
223.5
–
–
–
–
– 3.0
110.5
0.2
1.6
2.2
– 3.6
0.7
255.6
–
0.3
–
–
– 0.2
0.5
1.03
191.5
54.64
– 121.4
–
1,861.0
Amortisation
Balance as at 1 Oct 2013
Balance as at 1 October 2013 (restated)
Amortisation for the current year
Disposals
Reclassifications
Balance as at 30 Sep 2014 (restated)
Amortisation for the current year
Impairments for the current year
Disposals
Reclassifications
516.4
– 0.4
516.0
29.3
86.2
20.2
– 0.3
15.6
626.6
20.4
96.5
7.2
29.0
– 27.5
– 35.8
658.4
57.9
–
57.9
– 0.8
21.2
5.3
–
– 15.6
57.4
1.9
27.9
29.2
17.0
– 25.0
31.6
106.0
31.7
–
31.7
2.5
3.5
–
–
–
37.7
2.1
0.5
–
–
–
4.2
44.5
103.1
– 0.1
103.0
2.9
17.1
0.1
–
–
122.9
3.5
18.2
–
2.2
– 1.8
–
140.6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
709.1
– 0.5
708.6
33.9
128.0
25.62
– 0.3
–
844.6
27.9
143.1
36.4
48.24
– 54.3
0.0
949.5
Carrying amounts as at 30 Sep 2014 (restated)
Carrying amounts as at 30 Sep 2015
649.4
612.5
84.7
117.5
69.4
66.0
129.5
115.0
0.4
0.5
933.4
911.5
€ million
Historical cost
Balance as at 1 Oct 2013 (restated)
Additions due to changes in the group of
Additions
Disposals
Reclassifications
Additions due to changes in the group of
Additions
Disposals
Reclassifications
1
2
3
4
Of which additions due to first-time consolidation of non-consolidated companies of € 0.9 m
Of which disposals due to changes in the group of consolidated companies of € 1.2 m (historical cost) and € 1.0 m (amortisation), respectively
Of which disposals due to changes in the group of consolidated companies of € 1.5 m (historical cost) and € 0.8 m (amortisation), respectively
Self-generated software consists of computer programmes for tourism applications exclusively used internally by
the Group.
Other intangible assets mainly consist of trademarks and customer relationships, and are amortised over their
useful lives.
Impairments primarily relate to various modules of an internet platform solution for joint use in Northern, Western
and Central Region of € 21.8 m. The review of the carrying amount was based on a strategic decision to discontinue
the use of these modules. These modules have been fully impaired as there is no possibility to sell them externally.
The impairments were recognised within cost of sales.
As at the balance sheet date, the carrying amount of intangible assets subject to ownership restrictions or pledged
as security totals € 109.1 m (previous year € 112.3 m).
(16) Investment property
INVESTMENT PROPERTY
2014 / 15
2013 / 14
Historical cost
Balance as at 1 Oct
Additions
Disposals
Reclassifications
23.2
0.6
0.6
– 1.4
21.8
95.1
1.6
0.6
– 72.9
23.2
Depreciation
Balance as at 1 Oct
Depreciation for the current year
Disposals
Reclassifications
15.5
0.4
0.1
0.3
– 1.1
14.6
37.1
0.9
0.1
0.4
– 22.2
15.5
Carrying amounts as at 30 Sep
7.2
7.7
€ million
Real estate owned by the Group is usually occupied for use in the course of the Group’s ordinary business activities. In addition, the Group owns commercial property which meets the definition of investment property under
IAS 40. The carrying amount of this investment property shown in fixed assets totals € 7.2 m (previous year
€ 7.7 m). The fair values totalling € 10.1 m (previous year € 11.3 m) were calculated by the Group’s own real estate
company, without consulting an external expert, on the basis of comparable market rents (Level 3 valuation).
Investment property generated total income of € 5.3 m (previous year € 8.5 m). The generation of this income was
associated with expenses of € 4.9 m (previous year € 7.3 m) in financial year 2014 / 15. The reclassifications made in
the completed financial year relate to property in Bremen and Salzgitter, which were sold in the course of the year.
In the prior year, reclassifications related to the science park in Kiel and an industrial park in Berlin-Tempelhof,
initially reclassified to assets held for sale and subsequently sold.
NOTES
221
222
NOTES
(17) Property, plant and equipment
€ million
Historical cost
Additions due to changes in the group of consolidated companies
Additions
Disposals
Reclassifications
Additions due to changes in the group of consolidated companies
Additions
Disposals
Reclassifications
Depreciation
Disposals
Reclassifications
Disposals
Reclassifications
Carrying amounts as at 1 Oct 2014 (restated)
Carrying amounts as at 30 Sep 2015
1
2
3
4
Real estate
with hotels
Other real estate, land
rights and buildings incl.
buildings on third-party
properties
Aircraft
1,315.2
–
1,315.2
11.0
21.5
58.7
13.9
– 74.1
14.7
1,333.1
1,333.1
–
1,333.1
– 11.7
6.5
41.9
1.5
6.9
26.3
1,401.5
189.3
–
189.3
6.4
0.8
11.3
4.0
– 17.5
45.9
232.2
232.2
–
232.2
– 1.5
–
41.4
8.3
– 0.7
– 3.4
259.7
968.6
–
968.6
50.7
–
182.0
51.0
–
10.0
1,160.3
1,160.3
–
1,160.3
77.0
–
525.9
42.2
– 45.0
58.4
1,734.4
407.7
–
407.7
10.1
34.1
–
7.8
– 54.3
– 6.4
383.4
383.4
–
383.4
– 3.6
38.8
0.2
1.1
1.4
11.2
430.3
949.7
971.2
56.8
–
56.8
1.7
4.3
–
2.6
– 10.7
30.3
79.8
79.8
–
79.8
3.7
6.2
19.8
6.2
– 0.1
– 6.5
96.7
152.4
163.0
477.1
–
477.1
15.0
76.7
0.1
44.3
–
–
524.6
524.6
–
524.6
13.8
101.0
0.6
35.6
– 36.0
–
568.4
635.7
1,166.0
Of which disposals due to changes in the group of consolidated companies of € 0.3 m (historical cost) and € 0.2 m (depreciation), respectively
Of which disposals due to changes in the group of consolidated companies of € 0.8 m (historical cost) and € 0.7 m (depreciation), respectively
Ships
Machinery
and fixtures
Other plants, operating
and office equipment
revised
Assets under
construction
Payments
on account
Total
747.9
–
747.9
36.2
–
32.5
23.6
–
– 4.6
788.4
788.4
–
788.4
29.3
–
314.9
24.6
–
2.1
1,110.1
238.4
–
238.4
0.2
–
11.8
0.7
– 2.0
7.2
254.9
255.0
– 0.1
254.9
– 1.1
–
23.7
4.7
–
4.2
277.0
955.8
– 3.3
952.5
16.5
2.3
84.3
56.3
– 12.6
– 0.9
985.8
989.0
– 3.2
985.8
1.0
1.1
83.0
65.8
– 14.5
16.2
1,006.8
100.3
–
100.3
0.7
–
24.5
1.7
–
– 58.6
65.2
65.2
–
65.2
1.1
–
59.7
4.0
– 6.5
– 60.5
55.0
229.0
–
229.0
12.8
–
211.3
229.4
–
– 2.0
221.7
221.7
–
221.7
16.5
–
232.2
236.4
– 7.6
– 50.6
175.8
4,744.5
– 3.3
4,741.2
134.5
24.61
616.4
380.6 2
– 106.2
11.7
5,041.6
5,044.9
– 3.3
5,041.6
110.6
7.63
1,322.7
387.54
– 67.4
– 7.3
6,020.3
298.8
–
298.8
14.3
44.2
18.2
16.5
–
– 3.4
355.6
355.6
–
355.6
13.7
52.8
2.9
19.2
–
– 2.4
403.4
432.8
706.7
165.3
–
165.3
0.4
13.2
–
0.7
– 1.8
4.4
180.8
180.8
–
180.8
– 0.6
15.1
4.8
4.4
–
– 1.5
194.2
74.1
82.8
656.8
– 2.7
654.1
8.0
83.7
3.2
49.4
– 11.2
– 7.0
681.4
684.1
– 2.7
681.4
1.0
85.8
0.4
56.9
– 10.5
– 3.5
697.7
304.4
309.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2.2
1.7
– 0.5
–
0.0
65.2
55.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
221.7
175.8
2,062.5
– 2.7
2,059.8
49.5
256.2
21.5
121.3 2
– 78.0
17.9
2,205.6
2,208.3
– 2.7
2,205.6
28.0
299.7
30.9
125.14
– 45.7
– 2.7
2,390.7
2,836.0
3,629.6
NOTES
223
224
NOTES
In the period under review, cruise ship Europa 2 was acquired for a contractual purchase price of € 291.7 m. Following
deduction of lease payments of € 13.5 m made in advance, the remaining acquisition cost totalled € 278.2 m. The
transaction replaces the previous charter agreement for the cruise liner commissioned in 2013.
Moreover, seven aircraft worth € 556.6 m were capitalised in the period under review, six of which were operated
under finance leases with one aircraft owned by the Group. In addition, advance payments for further aircraft to
be delivered in the future amounting to € 224.4 m were capitalised.
In the period under review, impairment charges mainly related to buildings and technical systems at Tenuta di
Castelfalfi S.p.A in the segment Hotels & Resorts. An impairment test required due to planning updates, recognised
as at the balance sheet date, resulted in an impairment of € 26.4 m. The fair value of € 28.8 m was determined by
discounted cashflow valuations based on the current budget by applying a discount rate of 6.5 % p. a. Any cashflows for periods after the budgeting period have been extrapolated with a constant growth rate of 0.5 % p. a. As
the calculations were based on internal budgets, the fair values have to be assigned to level 3 under the IFRS 13
hierarchy. In the previous year, impairment charges were mainly recognised in relation to the Island Escape cruise
ship (€ 18.2 m). The impairment charges were included within cost of sales.
At the balance sheet date, the carrying amount of property, plant and equipment subject to restraints on ownership
or pledged as security amounts to € 700.4 m (previous year € 347.3 m).
Property, plant and equipment also includes leased assets in which Group subsidiaries have assumed substantially
all the risks and rewards of ownership of the assets.
COMPOSITION OF FINANCE LEASED ASSETS
€ million
Other real estate, land rights and buildings incl. buildings on third-party properties
Aircraft
Ships, yachts and boats
Machinery and fixtures
Other plants, operating and office equipment
Total
Net carrying amounts
30 Sep 2015
30 Sep 2014
24.2
871.0
96.3
0.1
18.4
1,010.0
15.2
418.6
101.8
0.8
16.8
553.2
The payment obligations resulting from future lease payments are included as liabilities, with future interest
expenses not reflected in the carrying amount of the financial liabilities. Total payments due in future periods
under finance leases amount to € 1,216.6 m (previous year € 612.7 m). Group companies have not accepted any
guarantees for the residual values of the leased assets, as in the prior year.
NOTES
225
R E C O N C I L I AT I O N O F F U T U R E L E A S E PAY M E N T S T O L I A B I L I T I E S F R O M F I N A N C E L E A S E S
30 Sep 2015
€ million
Total future lease payments
Interest portion
Liabilities from finance leases
up to 1 year
103.3
34.4
68.9
Remaining term
more than
5 years
1 – 5 years
396.4
115.8
280.6
716.9
84.4
632.5
30 Sep 2014
Total
up to 1 year
1,216.6
234.6
982.0
64.9
18.1
46.8
Remaining term
more than
5 years
1 – 5 years
196.3
59.3
137.0
(18) Investments in joint ventures and associates
The table below presents the TUI Group’s significant joint arrangements and associates. All joint arrangements
and associates are listed in the list of TUI Group Shareholdings in Note 56. All joint arrangements are joint ventures.
There are no joint operations within the definition of IFRS 12.
S I G N I F I C A N T A S S O C I AT E S A N D J O I N T V E N T U R E S
Name and headquarter of company
Associates
Sunwing Travel Group Inc., Toronto,
C anada
Blue Diamond Hotels and Resorts Inc.,
St. Michael, Barbados
Hapag-Lloyd Aktiengesellschaft,
Hamburg, Germany
Joint ventures
Riu Hotels S.A., Palma de Mallorca, Spain
TUI Cruises GmbH, Hamburg, Germany
Togebi Holdings Limited, Nicosia, Cyprus
Nature of business
Capital share in %
30 Sep 2015
30 Sep 2014
Voting rights share in %
30 Sep 2015
30 Sep 2014
Tour operator
49.0
49.0
25.0
25.0
Hotel operator
Container shipping
company
49.0
49.0
49.0
49.0
–*
22.0
–*
22.0
Hotel operator
Cruise ship operator
Tour operator
49.0
50.0
49.0
49.0
50.0
49.0
49.0
50.0
49.0
49.0
50.0
49.0
* Not measued at equity, significant influence lost in December 2014
All companies shown in the table are accounted for using the equity method.
The financial years of Sunwing Travel Group Inc. and Blue Diamond Hotels and Resorts Inc. correspond to the TUI
Group’s financial year. The financial years of the other associates and joint ventures end on 31 December of each year.
In order to update at equity measurement as at the TUI Group’s balance sheet date, interim financial statements
for the period ending 30 September are prepared for these companies.
351.5
34.7
316.8
Total
612.7
112.1
500.6
226
NOTES
S I G N I F I C A N T A S S O C I AT E S
In 2009, the Sunwing Travel Group entered into a partnership with TUI Group. Sunwing Travel Group Inc. is a
vertically integrated travel company that encompasses tour operators, an airline and retail travel agencies. The
company has different classes of shares. TUI Group holds 25 % of the voting shares.
Blue Diamond Hotels and Resorts Inc., a hotel operation and development company, operates a chain of luxury
beach holiday resorts and hotels in the Caribbean and Mexico.
Hapag-Lloyd AG is a container shipping group. In accordance with the amendments to IAS 28, applicable for the
TUI Group from financial year 2014 / 15, 70 % of the overall TUI Group interest – corresponding to 15.4 % of the
issued share capital – is recognised retrospectively as an associate using the equity method. The remaining 30 %
of the overall TUI Group interest – representing 6.6 % of issued share capital with a carrying amount of € 140.2 m – is
recognised as an asset held for sale, as before, due to the expected merger between Hapag-Lloyd AG and Compañia
Sud Americana de Vapores S.A. (CSAV ) and the associated reduction in the interest held in Hapag-Lloyd AG to
15.4 %. This resulted in a restatement of the prior year amounts. See the section “Restatement of the prior
reporting period”.
C H A N G E S I N T H E G R O U P ’ S I N T E R E S T I N S I G N I F I C A N T A S S O C I AT E S
In the prior year, the TUI Group held a stake of 22.0 % in Hapag-Lloyd AG located in Hamburg. On 2 December
2014, the merger between Hapag-Lloyd AG and Compañia Sud Americana de Vapores S.A. (CSAV ), contractually
agreed in April 2014, was completed. In the framework of this transaction, CSAV transferred its container shipping
activities to Hapag-Lloyd AG as a non-cash contribution, in exchange for a 30 % stake in the combined entity. TUI
Group’s stake in post-merger Hapag-Lloyd declined from 22.0 % to 15.4 % due to the transaction. As a result, TUI
lost its significant influence over the company. In accordance with IAS 28, the stake in the interest measured at
equity of € 344.4 m and the stake included as assets held for sale of € 140.2 m were derecognised, and the remaining
interest, whose fair value totalled € 481.9 m at the closing date of the transaction, was recognised as a financial
asset available for sale.
The interest in Hapag-Lloyd AG declined from 15.4 % to 13.9 % due to non-participation in a cash capital increase
carried out in mid-December 2014. As at 30 September 2015, the remaining interest in Hapag-Lloyd AG is carried
as a financial asset available for sale, as before.
SIGNIFICANT JOINT VENTURES
Riu Hotels S.A. is a hotel company owning and operating 4- to 5-star hotels. The hotels of the company established
in 1976 are mainly located in Spain and Central America.
TUI Cruises is a joint venture with the US shipping line Royal Caribbean Cruises Ltd. established in 2008. The
Hamburg-based company offers German-speaking cruises for the premium market. Since the commissioning of
Mein Schiff 4 in June 2015, TUI Cruises has operated four cruise ships in this market.
Togebi Holdings Limited is a joint venture with Oscrivia Limited, a company owned by the Russian S-Group Capital
Management Limited. The business purpose of this joint venture, established in 2009, is to develop the tour
operation business, in particular in Russia and Ukraine. The company owns tour operation subsidiaries and retail
chains in these countries.
F I N A N C I A L I N F O R M AT I O N O N A S S O C I AT E S A N D J O I N T V E N T U R E S
The following tables provide summarised financial information for the significant associates and joint ventures of the
TUI Group. The information disclosed reflects the full amounts presented in the consolidated financial statements
of the relevant associates and joint ventures (100 per cent) and not TUI Group’s share of those amounts.
C O M B I N E D F I N A N C I A L I N F O R M AT I O N O F M AT E R I A L A S S O C I AT E S
€ million
Non-current assets
Current assets
Revenues
Profit / loss1
1
2
Blue Diamond
Hapag-Lloyd AG ,
Hotels and R
esorts Inc.,
Hamburg, Germany
Sunwing Travel Group Inc.,
(until December 2014)2
Toronto, Canada
30 Sep 2015 / 30 Sep 2014 / 30 Sep 2015 / 30 Sep 2014 / 30 Sep 2015 / 30 Sep 2014 /
2014 / 15
2013 / 14
2014 / 15
2013 / 14
2014 / 15
2013 / 14
163.1
368.9
44.9
285.7
160.8
315.5
40.5
265.4
314.7
84.1
114.9
170.8
212.3
38.9
76.7
87.5
–
–
–
–
5,326.9
1,289.5
3,064.2
1,471.9
1,557.3
45.2
–
45.2
1,231.4
36.3
–
36.3
201.9
17.5
– 1.6
15.9
97.2
15.3
– 3.9
11.4
1,168.0
– 51.9
15.2
– 36.7
6,547.6
– 275.8
89.3
– 186.5
Solely from continuing operations
Until classification of investment in Hapag-Lloyd AG as available for sale financial asset
C O M B I N E D F I N A N C I A L I N F O R M AT I O N O F M AT E R I A L J O I N T V E N T U R E S
€ million
Riu Hotels S.A.,
TUI Cruises GmbH,
Togebi Holdings Limited,
Palma de Mallorca, Spain
Hamburg, Germany
Nicosia, Cyprus
30 Sep 2015 / 30 Sep 2014 / 30 Sep 2015 / 30 Sep 2014 / 30 Sep 2015 / 30 Sep 2014 /
2014 / 15
2013 / 14
2014 / 15
2013 / 14
2014 / 15
2013 / 14
Non-current assets
Current assets
thereof cash and cash equivalents
thereof financial liabilities
thereof financial liabilities
829.7
72.1
27.4
101.7
73.2
160.6
104.6
720.5
72.8
27.0
81.5
79.8
145.6
145.5
1,569.4
195.7
109.0
860.4
860.4
367.9
–
1,107.0
175.9
128.0
585.1
538.8
204.6
–
5.2
19.0
3.4
157.0
146.1
35.5
27.3
30.3
41.8
6.1
105.2
98.6
74.6
49.0
Turnover
Depreciation of intangible assets and
property, plant and equipment
Interest income
Interest expenses
Income taxes
Profit / loss1
276.9
228.6
614.1
381.3
200.9
397.9
24.9
0.1
2.6
26.1
70.9
69.1
140.0
22.3
0.4
3.2
22.8
53.4
19.5
72.9
42.0
5.8
11.4
–
136.2
– 22.6
113.6
28.8
7.6
7.2
–
62.6
15.8
78.4
4.7
–
5.0
–
– 44.1
–
– 44.1
1.1
–
5.0
– 0.2
– 72.5
–
– 72.5
1
Solely from continuing operations
NOTES
227
228
NOTES
In the financial year 2014 / 15, TUI Group received dividends of € 35.0 m from TUI Cruises and € 34.3 m from Riu
Hotels S.A. In total dividends amounting to € 76.4 m were paid by all joint ventures to the TUI Group (previous year
€ 24.2 m, thereof € 9.8 m from Riu Hotels S.A.). In the financial year 2014 / 15 the TUI Group received dividends
amounting to € 2.6 m from all associates in total, thereof no dividends from any of the major associates (previous
year € 12.3 m in total, thereof € 8.4 m from Sunwing Travel Group).
In addition to the material associates and joint ventures, TUI Group has interests in a number of equity accounted
associates and joint ventures that are individually not considered as significant. The tables below provide information
on TUI Group’s share of the profit / loss, other income and other comprehensive income of the material associates
and joint ventures as well as the aggregated amount of the share of these earnings figures for the immaterial
associates and joint ventures.
S H A R E O F F I N A N C I A L I N F O R M AT I O N O F M AT E R I A L A N D O T H E R A S S O C I AT E S
Sunwing Travel Group Inc.,
Toronto, Canada
30 Sep
30 Sep
2015 /
2014 /
2014 / 15
2013 / 14
Blue Diamond
Hotels and Resorts Inc.,
St. Michael , Barbados
30 Sep
30 Sep
2015 /
2014 /
2014 / 15
2013 / 14
Hapag-Lloyd AG ,
Hamburg, Germany
(until December 2014)
30 Sep
30 Sep
2015 /
2014 /
2014 / 15
2013 / 14
Other associates
30 Sep
30 Sep
2015 /
2014 /
2014 / 15
2013 / 14
€ million
Associates Total
30 Sep
30 Sep
2015 /
2014 /
2014 / 15
2013 / 14
restated
TUI ’s share of
Profit / loss
Other comprehensive
income / loss
Total comprehensive
income / loss
22.1
17.8
8.6
7.5
0.9
– 54.2
– 2.7
– 0.7
28.9
– 29.6
–
– 0.1
– 0.8
– 1.9
– 0.1
– 4.9
–
0.1
– 0.9
– 6.8
22.1
17.7
7.8
5.6
0.8
– 59.1
– 2.7
– 0.6
28.0
– 36.4
30 Sep
2015 /
2014 / 15
Other joint
ventures
30 Sep
2014 /
2013 / 14
S H A R E O F F I N A N C I A L I N F O R M AT I O N O F M AT E R I A L A N D O T H E R J O I N T V E N T U R E S
Riu Hotels S.A., Palma de
Mallorca, Spain
30 Sep
30 Sep
2015 /
2014 /
2014 / 15
2013 / 14
TUI Cruises GmbH,
Hamburg, Germany
30 Sep
30 Sep
2015 /
2014 /
2014 / 15
2013 / 14
Togebi Holdings Limited,
Nicosia, Cyprus
30 Sep
30 Sep
2015 /
2014 /
2014 / 15
2013 / 14
€ million
Joint ventures Total
30 Sep
30 Sep
2015 /
2014 /
2014 / 15
2013 / 14
restated
TUI ’s share of
Profit / loss
Other comprehensive
income / loss
Total comprehensive
income / loss
34.7
26.3
68.1
31.3
–
– 21.3
12.8
20.1
115.6
56.4
33.6
9.6
– 11.3
7.9
–
–
– 0.8
1.5
21.5
19.0
68.3
35.9
56.8
39.2
–
– 21.3
12.0
21.6
137.1
75.4
NOTES
229
N E T A S S E T S O F T H E M AT E R I A L A S S O C I AT E S
€ million
Sunwing Travel Group
Inc., Toronto, Canada
Blue Diamond Hotels
and Resorts Inc.,
Hapag-Lloyd AG ,
Hamburg, Germany
(until December 2014)
152.1
36.3
–
– 17.2
– 1.0
0.2
170.4
170.4
45.2
–
–
–
– 14.2
201.4
69.3
15.3
– 3.9
–
–
6.3
87.0
87.0
17.5
– 1.6
–
–
10.2
113.1
2,266.8
– 275.8
– 31.7
–
–
121.0
2,080.3
2,080.3
– 51.9
– 0.6
–
–
15.8
2,043.6
Net assets as at 1 Oct 2013
Profit / loss
Dividends
Capital increase
Foreign exchange effects
Net assets as at 30 Sep 2014
Profit / loss
Dividends payable
Capital increase
Net assets as at 30 Sep 2015*
* In case of Hapag-Lloyd AG the net assets are shown as at 2 Dec 2014
R E C O N C I L I AT I O N T O T H E C A R R Y I N G A M O U N T O F T H E A S S O C I AT E S I N T H E G R O U P B A L A N C E S H E E T
€ million
Share of TUI in % as at 30 Sep 2014
TUI ’s share of the net assets as at
30 Sep 2014
Goodwill as at 30 Sep 2014
Carrying value as at 30 Sep 2014
30 Sep 2015
* Only the equity accounted part
Sunwing Travel Group
Inc., Toronto, Canada
Blue Diamond Hotels
Hapag-Lloyd AG ,
and Resorts Inc.,
Hamburg, Germany
St. Michael, Barbados (until December 2014)*
Other associates
Associates Total
restated
49.0
49.0
15.4
–
–
83.5
53.6
137.1
42.6
–
42.6
233.6
110.7
344.3
21.4
10.9
32.3
381.1
175.2
556.3
49.0
49.0
–
–
–
98.7
50.1
148.8
55.4
–
55.4
–
–
–
25.5
4.0
29.5
179.6
54.1
233.7
230
NOTES
N E T A S S E T S O F T H E M AT E R I A L J O I N T V E N T U R E S
Riu Hotels S.A., Palma
de Mallorca, Spain
€ million
Profit / loss
Dividends
Capital increase
Profit / loss
Dividends payable
Capital increase
TUI Cruises GmbH,
Togebi Holdings
Hamburg, Germany Limited, Nicosia, Cyprus
491.6
53.4
19.5
– 20.0
–
20.0
564.5
564.5
70.9
69.1
– 70.0
–
3.2
637.7
394.9
62.6
15.7
–
20.0
–
493.2
493.2
136.2
– 22.6
– 70.0
–
–
536.8
– 44.8
– 72.5
–
–
19.6
– 10.0
– 107.7
– 107.7
– 44.1
–
–
–
– 16.7
– 168.5
Other joint
ventures
Joint ventures
Total
restated
R E C O N C I L I AT I O N T O T H E C A R R Y I N G A M O U N T O F T H E J O I N T V E N T U R E S I N T H E G R O U P B A L A N C E S H E E T
Riu Hotels S.A., Palma
de Mallorca, Spain
€ million
30 Sep 2014
Unrecognised share of losses
30 Sep 2015
Unrecognised share of losses
TUI Cruises GmbH,
Togebi Holdings
Hamburg, Germany Limited, Nicosia, Cyprus
49.0
50.0
49.0
–
–
276.8
–
1.7
278.5
246.6
–
–
246.6
– 52.8
14.8
38.0
–
225.7
–
29.3
255.0
696.3
14.8
69.0
780.1
49.0
50.0
49.0
–
–
312.7
–
1.7
314.4
268.4
–
–
268.4
– 82.6
39.9
42.7
–
228.1
–
33.2
261.3
726.6
39.9
77.6
844.1
UNRECOGNISED LOSSE S BY JOINT VENTURE S
Unrecognised cumulative losses of € 39.9 m relate to the joint venture Togebi Holdings Limited ( TUI Russia), operating in the source markets of Russia and Ukraine. Due to the recognition of the share of losses in the previous
years the carrying amount of the joint venture was already fully written off in financial year 2013 / 14. Further
losses of € 25.1 m (previous year € 14.8 m) have not been recognised as the TUI Group has no obligation to cover
the losses. Recognition of these losses would have reduced the carrying amount of the joint venture to below zero.
R I S K S A S S O C I AT E D W I T H T H E S TA K E S I N A S S O C I AT E S A N D J O I N T V E N T U R E S
No contingent liabilities existed in respect of associates as at 30 September 2015 (previous year € 235.9 m).
Contingent liabilities of € 125.4 m (previous year € 125.8 m) exist in respect of joint ventures. In addition, financial
liabilities from investments of € 877.2 m and from lease, charter and rental agreements worth € 9.3 m are in place
in respect of joint ventures.
(19) Financial assets available for sale
Financial assets available for sale consist of stakes in non-consolidated Group companies, interests and other
securities.
FINANCIAL A SSE T S AVAIL ABLE FOR SALE
30 Sep 2015
€ million
Shares in non-consolidated Group companies
Investments
Other securities
Total
Remaining
term more
than 1 year
5.9
38.5
11.8
56.2
30 Sep 2014
Total
Remaining
term more
than 1 year
Total
5.9
373.4
11.8
391.1
8.3
37.1
17.3
62.7
8.3
37.1
317.3
362.7
As at 30 September 2014, other current securities comprised shares in a money market fund worth € 300.0 m,
representing the issuance proceeds from the high-yield bond issued in the framework of the merger that were
sold upon the completion of the merger with TUI Travel PLC when the restriction on disposal was lifted.
As at 30 September 2015, investments comprise the remaining 13.9 % stake in Hapag-Lloyd AG . The investment
is carried at its fair value of € 334.9 m at the balance sheet date. For the fair value measurement of the stake in
Hapag-Lloyd AG , we refer to the section “Level 3 financial instruments“ in Note 44.
Testing the carrying amounts of available for sale financial assets for objective evidence that the assets may be
impaired resulted in an impairment of the stake in Hapag-Lloyd AG of € 147.1 m. In management judgement, the
decline in fair value below the cost of the investment is significant. The investment was, therefore, written-off to its
fair value of € 334.9 through profit and loss. The impairment charge of € 147.1 m was included in financial expenses.
Past increases of the fair value deferred in other comprehensive income of € 7.1 m were derecognised.
In financial year 2014 / 15, financial assets classified as available for sale under IAS 39 of € 155.6 m (previous year
€ 1.9 m) were impaired.
Where a listed market price in an active market is not available and other methods to determine an objective
market value do not produce any reliable results, the shares are measured at cost.
NOTES
231
232
NOTES
(20) Trade receivables and other receivables
TR ADE RECE IVABLE S AND OTHE R A SSE T S
30 Sep 2015
€ million
Trade receivables
Advances and loans
Other receivables and assets
Total
Remaining
term more
than 1 year
–
243.2
89.3
332.5
30 Sep 2014
restated
Total
Remaining
term more
than 1 year
Total
740.1
1,086.5
454.6
2,281.2
–
232.6
135.5
368.1
693.9
1,004.1
581.3
2,279.3
AGEING STRUCTURE OF THE FINANCIAL INSTRUMENTS INCLUDED
IN TR ADE RECE IVABLE S AND OTHE R A SSE T S
of which not impaired and
overdue in the following periods
Carrying
amount of
financial
instruments
of which not
impaired but
overdue
less than
30 days
between
30 and
90 days
between
91 and
180 days
more than
180 days
Trade receivables
Advances and loans
Total
740.1
118.5
206.1
1,064.7
190.0
17.7
18.2
225.9
94.1
–
12.2
106.3
66.0
0.7
3.9
70.6
15.1
0.3
0.4
15.8
14.8
16.7
1.7
33.2
Trade receivables
Advances and loans
Total
693.9
107.1
312.8
1,113.8
176.6
22.8
23.3
222.7
100.7
0.3
5.7
106.7
52.3
0.6
3.7
56.6
16.7
0.6
3.5
20.8
6.9
21.3
10.4
38.6
€ million
For financial assets which are neither past due nor impaired, the TUI Group assumes that the borrower concerned
has a good credit standing.
As at 30 September 2015, trade receivables and other receivables worth € 99.7 m (previous year € 100.3 m) were
impaired. The table below provides a maturity analysis of the impairments.
AG E ING S T RUC T URE O F IMPA IRME N T S O F F IN A NCIA L IN S T RUME N T S INCLUDE D
IN TR ADE RECE IVABLE S AND OTHE R A SSE T S
30 Sep 2015
€ million
Not overdue
Overdue up to 30 days
Overdue 30 – 90 days
Overdue 90 – 180 days
Overdue more than 180 days
Total
Gross value
Impairment
Net value
Gross value
Impairment
30 Sep 2014
restated
Net value
859.7
107.1
75.9
22.3
99.4
1,164.4
20.9
0.8
5.3
6.5
66.2
99.7
838.8
106.3
70.6
15.8
33.2
1,064.7
915.2
107.7
58.1
23.1
110.0
1,214.1
24.1
1.0
1.5
2.3
71.4
100.3
891.1
106.7
56.6
20.8
38.6
1,113.8
Impairments of trade receivables and other receivables developed as follows:
IMPA IRME N T S ON A S SE T S OF T HE T R A DE RECE IVA BL E S A ND OT HE R A S SE T S
C AT E G O R Y A C C O R D I N G T O I F R S 7
€ million
Balance at the beginning of period
Additions
Disposals
Other changes
Balance at the end of period
2014 / 15
2013 / 14
100.3
16.1
5.9
– 10.8
99.7
135.9
11.5
15.5
– 31.6
100.3
In financial year 2014 / 15 no cash inflow was recorded from impaired interest-bearing trade receivables and other
assets (previous year € 1.5 m).
Trade receivables, advances and loans as well as other receivables and assets comprise the following items:
TR ADE RECE IVABLE S
30 Sep 2015
30 Sep 2014
restated
712.4
1.5
26.2
740.1
652.9
2.6
38.4
693.9
€ million
From third parties
From non-consolidated Group companies
From affiliates
Total
NOTES
233
234
NOTES
ADVANCE S AND LOANS
30 Sep 2015
€ million
Advances to non-consolidated Group companies
Advances to affiliates
Loans to affiliates
Advances to third parties
Loans to third parties
Payments on account to affiliates
Payments on account to third parties
Total
Remaining
term more
than 1 year
0.4
0.1
39.6
1.4
34.9
3.0
163.8
243.2
30 Sep 2014
restated
Total
Remaining
term more
than 1 year
Total
17.4
0.9
40.7
24.5
36.4
11.7
954.9
1,086.5
0.6
0.2
42.1
7.3
13.6
–
168.8
232.6
16.4
1.5
44.0
30.9
15.5
25.9
869.9
1,004.1
Payments on account mainly relate to advance payments for future tourism services, in particular future hotel
services to be received by tour operators, which is customary in the industry.
OTHE R RECE IVABLE S AND A SSE T S
30 Sep 2015
€ million
Other receivables from non-consolidated Group companies
Other receivables from affiliates
Interest deferral
Other tax refund claims
Other assets
Total
Remaining
term more
than 1 year
1.5
6.2
–
9.9
71.7
89.3
30 Sep 2014
restated
Total
Remaining
term more
than 1 year
Total
1.7
18.0
1.9
90.4
342.6
454.6
1.9
35.7
–
33.4
64.5
135.5
1.9
54.9
1.4
96.1
427.0
581.3
(21) Derivative financial instruments
D E R I VAT I V E F I N A N C I A L I N S T R U M E N T S
30 Sep 2015
€ million
Third party receivables from derivative financial instruments
Remaining
term more
than 1 year
48.1
30 Sep 2014
restated
Total
Remaining
term more
than 1 year
Total
329.1
75.8
245.5
Derivative financial instruments are included at their fair value (market value). They are mainly used to hedge our
future operating business and their nature is outlined in detail in the explanatory information on financial instruments.
(22) Deferred and current tax assets
The measurement of deferred and current taxes is detailed in the section “Accounting and measurement methods”.
I N C O M E TA X A S S E T S
30 Sep 2015
30 Sep 2014
restated
330.7
58.5
389.2
235.9
93.9
329.8
€ million
Deferred tax assets
Current tax assets
Total
Deferred income tax assets include € 287.6 m (previous year € 197.9 m) that is expected to be realised after more
than twelve months.
I N D I V I D U A L I T E M S O F D E F E R R E D TA X A S S E T S A N D L I A B I L I T I E S R E C O G N I S E D I N T H E F I N A N C I A L P O S I T I O N
30 Sep 2015
€ million
Finance lease transactions
Recognition and measurement differences for property,
plant and equipment and other non-current assets
Recognition differences for receivables and other assets
Measurement of financial instruments
Measurement of pension provisions
Recognition and measurement differences for other provisions
Other transactions
Capitalised tax savings from recoverable losses carried forward
Netting of deferred tax assets and liabilities
Balance sheet amount
Asset
Liability
Asset
30 Sep 2014
restated
Liability
–
2.2
–
2.3
110.7
4.4
53.5
143.2
67.4
64.1
239.4
– 352.0
330.7
317.7
40.0
22.1
0.8
14.1
80.8
–
– 352.0
125.7
145.2
12.4
24.9
157.0
60.0
59.1
135.0
– 357.7
235.9
333.2
42.2
36.6
0.4
14.3
73.5
–
– 357.7
144.8
No deferred tax assets are recognised for deductible temporary differences of € 128.2 m (previous year € 110.9 m).
No deferred tax liabilities are recognised for temporary differences of € 49.5 m (previous year € 43.0 m) between
the net assets and the respective taxable carrying amounts of subsidiaries since these temporary differences are
not expected to be reversed in the near future.
NOTES
235
236
NOTES
C A P I TA L I S E D L O S S E S C A R R I E D F O R WA R D A N D T I M E L I M I T S F O R N O N - C A P I TA L I S E D L O S S E S
C ARRIED FORWARD
30 Sep 2015
30 Sep 2014
restated
1,184.4
4,449.8
2.7
62.3
677.0
5,328.8
14.0
7.8
6.0
4,378.8
5,634.2
1.6
5,305.4
6,005.8
€ million
Capitalised losses carried forward
Non-capitalised losses carried forward
of which losses carried forward forfeitable within one year
of which losses carried forward forfeitable within 2 to 5 years
of which losses carried forward forfeitable within more than 5 years
(excluding non-forfeitable loss carryforwards)
Non-forfeitable losses carried forward
Total unused losses carried forward
Losses carried forward for German companies comprise the cumulative amount of trade tax and corporation tax
as well as interest carried forward in relation to the German interest barrier. Potential tax savings totalling
€ 907.2 m (previous year € 1,037.9 m) were not capitalised since the use of the underlying losses carried forward is
unlikely to be utilised within the planning period.
In the financial year 2014 / 15, the use of losses carried forward previously assessed as non-recoverable and for which
no deferred tax asset had been recognised as at 30 September 2014 led to tax reductions of € 24.0 m (previous
year €Nil). As in the prior year, no tax reductions were realised by means of losses carried back.
D E V E L O P M E N T O F D E F E R R E D TA X A S S E T S F R O M L O S S E S C A R R I E D F O R WA R D
2014 / 15
2013 / 14
restated
135.0
– 14.4
150.1
– 36.1
– 0.3
5.1
239.4
160.5
– 22.8
12.6
– 21.1
–
5.8
135.0
€ million
Capitalised tax savings at the beginning of the year
Use of losses carried forward
Capitalisation of tax savings from tax losses carried forward
Write-down of capitalised tax savings from tax losses carried forward
Reclassification to discontinued operation
Exchange adjustments and other items
Capitalised tax savings at financial year-end
Capitalised deferred tax assets from temporary differences and losses carried forward that are assessed as recoverable of € 203.3 m (previous year € 10.5 m) are covered by expected future taxable income even for companies
that generated losses in the period under review or the prior year. In the financial year 2014 / 15, the recoverability
of these deferred tax assets results from the enlargement of the German tax Group for income tax purposes.
(23) Inventories
INVENTORIES
30 Sep 2015
30 Sep 2014
restated
33.2
28.6
32.8
39.9
134.5
24.2
30.0
31.2
40.9
126.3
€ million
Marine inventory
Airline spares and operating equipment
Real estate for sale
Other inventories
Total
Other inventories included an amount of € 16.6 m for consumables used in hotels (previous year € 16.5 m).
No major reversals of inventory provisions were recognised in the financial year 2014 / 15, nor in the prior year.
(24) Cash and cash equivalents
C A SH AND C A SH EQUIVALE NT S
30 Sep 2015
30 Sep 2014
restated
1,641.8
30.9
1,672.7
2,222.8
35.2
2,258.0
€ million
Bank deposits
Cash in hand and cheques
Total
At 30 September 2015, cash and cash equivalents of € 198.5 m (previous year € 180.3 m) was subject to restriction
on disposal. This included an amount of € 116.3 m for cash collateral received, which was deposited in a Belgian
subsidiary by the Belgian tax authorities in the financial year 2012 / 13 relating to long-standing litigation over VAT
refunds for the years 2001 to 2011. Without prejudice to the outcome, the purpose was to suspend the accrual of
interest for both parties. In order to collateralise a potential repayment, the Belgian government was granted a
bank guarantee. Due to the bank guarantee, TUI Group’s ability to dispose of the cash and cash equivalents has
been restricted.
NOTES
237
238
NOTES
(25) Assets held for sale
ASSETS HELD FOR SALE
30 Sep 2015
30 Sep 2014
restated
–
38.8
0.4
3.0
42.2
140.2
–
13.0
2.7
155.9
€ million
Investment Hapag-Lloyd AG
Discontinued Operation LateRooms Group
Property and hotel facilities
Other assets
Total
In the reporting period, the LateRooms Group segment was reclassified to assets held for sale as a discontinued
operation. As at 30 September 2015, there were assets of € 38.8 m in connection with this discontinued operation.
For further information, please refer to the section “Discontinued operations”.
In accordance with IFRS 5, the assets and liabilities of LateRooms Ltd. which were included in the discontinued
operation LateRooms Group were written down to their fair value less costs of disposal of € 11.6 m. This is a non-
recurring fair value measurement, for which current purchase offers of potential buyers were used as non-observable
inputs. The measurement is therefore categorised within level 3 of the fair value hierarchy. The impairment charge
of € 36.0 m was recognised in the “Result from discontinued operations”.
Cumulative expenses related to assets held for sale, directly carried in equity, total € 5.5 m.
(26) Subscribed capital
The merger between TUI AG and TUI Travel PLC had a major impact on the Group’s equity capital position. For
a more detailed presentation, we refer to the section on the “Merger between TUI AG and TUI Travel PLC ” in
this report.
The subscribed capital of TUI AG consists of no-par value shares, each representing an identical share in the
capital stock. The proportionate share in the capital stock per no-par value share is around € 2.56. Since the switch
in July 2005, the shares have been registered shares, whose owners have been listed by name in the share register.
The subscribed capital of TUI AG is registered in the commercial registers of the district courts of Berlin-
Charlottenburg and Hanover. In the financial year under review, it rose by a total of 242,764,546 shares due to the
capital increase as a result of non-cash contribution in connection with the merger between TUI AG and TUI Travel PLC .
A further 133,340 shares were issued as employee shares. Conversions of bonds into shares under TUI AG ’s
2009 / 14 and 2011 / 16 convertible bonds and conversions of a convertible bond issued by TUI Travel PLC gave
rise to 57,144,188 shares. Subscribed capital thus consisted of 586,603,217 shares at the end of the financial year.
It rose by € 767.0 m to € 1,499.6 m.
As at 30 September 2015, 2,745,990 shares in TUI AG were held by an employee benefit trust of TUI Travel Limited.
The Annual General Meeting on 10 February 2015 authorised the Executive Board of TUI AG to acquire its own
shares up to 5 % of the capital stock. The authorisation will expire on 9 August 2016. The authorisation to acquire
own shares has not been used to date.
C O N D I T I O N A L C A P I TA L
The Annual General Meetings of 7 May 2008 and 13 May 2009 created conditional capital of € 100.0 m each and
authorised the Company to issue bonds. The two conditional capital authorisations expired in the financial year
2014 / 15 due to conversion and repayment, respectively, of the convertible bonds issued in 2009 and 2011.
Using the conditional capital of 13 May 2009, TUI AG issued an uncollateralised, non-subordinated convertible
bond of € 217.8 m, on 17 November 2009, maturing on 17 November 2014. The bond was issued in denominations
of € 56.30. The last conversion price was € 5.5645 per no-par value share due to the cash dividend paid on 13 February 2014. By the end of the conversion period, 3,425,345 bonds had been converted into 38,697,895 new shares
in TUI AG (including 4,143,061 bonds in the financial year under review). The remaining nominal value of € 2.4 m
was repaid at maturity on 17 November 2014.
Using the conditional capital of 7 May 2008, TUI AG issued a further uncollateralised non-subordinated convertible
bond of € 339.0 m on 24 March 2011, maturing on 24 March 2016. The bond was issued in denominations of
€ 59.26. Due to the cash dividend paid on 11 February 2015, the last conversion price was € 11.4634 per non-par
value share. The convertible bond was redeemed early in the period under review. Until the end of the conversion
period, 5,680,079 bonds were converted into 29,362,361 new shares in TUI AG (including 29,360,677 shares in the
financial year under review). The remaining nominal value of € 2.4 m was repaid at maturity on 7 April 2015.
The General Meeting of 28 October 2014 created conditional capital of € 62.0 m for the granting of new shares to
the holders of a convertible bond with a nominal value of £ 400.0 m issued by TUI Travel PLC in April 2010. In the
framework of the merger between TUI AG and TUI Travel PLC , these bondholders had special early redemption
rights; the ratio for exchanging the shares in TUI Travel PLC resulting from the conversion into TUI AG shares was
fixed at 1:0.399. When a large majority of external bondholders had used the right to convert their pieces of
bonds into shares and the bonds held within the Group had been redeemed, TUI Travel Ltd. announced the early
redemption of the remaining bonds on 3 March 2015. While a part of the convertible bond with a nominal value
of € 200.0 m, held by TUI AG , was redeemed, all other convertible bonds were converted. This led to the creation
of 23,640,450 new shares in TUI AG .
Further conditional capital for the issue of bonds of € 120.0 m was approved at the Annual General Meeting on
15 February 2012. The authorisation to issue bonds with conversion options and warrants as well as profit-sharing
rights and income bonds (with and without fixed terms) has been limited to a total nominal amount of € 1.0 bn and
will expire on 14 February 2017.
Overall, TUI AG has total conditional capital of € 120.0 m as at 30 September 2015 (previous year € 231.7 m).
A U T H O R I S E D C A P I TA L
The Annual General Meeting of 9 February 2011 resolved to create additional authorised capital of € 246.0 m for
the issue of new shares for cash. This authorisation will expire on 8 February 2016.
The Annual General Meeting of 13 February 2013 resolved to issue new registered shares for cash for up to a
maximum of € 64.5 m. This authorisation will expire on 12 February 2018.
The Annual General Meeting of 13 February 2013 also resolved new authorised capital for the issue of employee
shares worth € 10.0 m. The Executive Board of TUI AG has been authorised to use this authorised capital in one or
several transactions to issue employee shares against cash contribution by 12 February 2018. 99,800 new employee
shares were issued in financial year 2014 / 15 so that authorised capital totals around € 9.4 m at the balance sheet date.
NOTES
239
240
NOTES
The General Meeting of 28 October 2014 resolved to create authorised capital to issue new shares against non-cash
contribution of € 18.0 m in order to be able to service TUI Travel PLC share awards granted by TUI Travel PLC to its
employees. This authorisation will expire on 27 October 2019.
Unused authorised capital thus totals around € 337.9 m as at 30 September 2015 (previous year € 320.2 m).
(27) Capital reserves
The capital reserves reflect transfers of premiums. In addition, amounts entitling the holders to acquire shares in
TUI AG in the context of bonds issued for conversion options and warrants have to be transferred to the capital
reserves if the conversion options and warrants are classified as equity instruments in accordance with IAS 32.
Premiums from the issue of shares due to the exercise of conversion options and warrants are also transferred to
the capital reserve.
Transaction costs for the issue of conversion options and warrants and for the capital increase by means of an
issue of new shares against cash or non-cash contribution were deducted from the additions to capital reserves
resulting from these transactions.
Capital reserves rose by € 2,676.8 m due to the capital increase against non-cash contribution in connection with
the merger between TUI AG and TUI Travel PLC . Capital reserves also rose by € 1.2 m due to the issue of employee
shares and by € 453.4 m from the conversion of TUI AG bonds into shares. Overall, TUI AG ’s capital reserves
increased by € 3,131.4 m to € 4,187.7 m.
(28) Revenue reserves
In the financial year 2014 / 15, TUI AG paid a dividend of € 0.33 per no-par value share; the total amount paid was
€ 94.5 m. Moreover, the interest paid on the hybrid capital issued by TUI AG recognised as a dividend in accordance
with IFRS rules until its cancellation effective 24 March 2015.
Existing equity-settled share-based payment transactions resulted in an increase in equity of € 26.1 m. Disclosures
on these long-term incentive programmes are given under Note 43 in the section on “Share-based payments in
accordance with IFRS 2”.
Effects of the acquisition of non-controlling interests principally reflect the merger between TUI AG and
TUI Travel PLC . The consideration including ancillary acquisition costs for the purchase of the non-controlling
interests totalled € 3,359.7 m, while the book value of the acquired interests accounted for € – 606.2 m. In this
regard, please refer to the section on “Merger between TUI AG and TUI Travel PLC ” in this report.
In addition, an employee benefit trust of TUI Travel PLC acquired shares in TUI Travel PLC in the first quarter in
order to use them for stock option plans. The amounts used for this purpose had to be offset against revenue
reserves as an acquisition of non-controlling interests. Equity therefore declined by € 85.1 m. As almost all shares
were issued due to the stock option plans, non-controlling interests remained unchanged overall.
The split of the Peak Adventure Travel Group Ltd, Australia, presented in the section on “Principles and methods of
consolidation”, is reflected as an acquisition of non-controlling interests. The consideration paid for the acquisition
totalled € 23.4 m, while the non-controlling interests acquired totalled € 42.0 m.
Furthermore, non-controlling interests in Global Obi S.L., Spain, in Wonder Holding AB , Sweden and in TUI Leisure
airport sales GmbH, Germany, were acquired in financial year 2014 / 15. The consideration paid for the acquisition
amounted to € 1.3 m, the acquired carrying amounts of the non-controlling interests totalled € 0.6 m.
Foreign exchange differences comprise differences from the translation of the financial statements of foreign
subsidiaries as well as differences from the translation of goodwill denominated in foreign currencies.
The proportion of gains and losses from hedges used as effective hedges of future cash flows is included in equity
in other comprehensive income outside profit and loss. A reversal of this item through profit and loss takes place in
the same period in which the hedged item has an effect on profit and loss or is no longer assessed as probable.
The remeasurements of pension obligations (arising from actuarial gains and losses) are also included in other
income in equity outside profit and loss.
The revaluation reserve formed in accordance with IAS 27 (old version) in the framework of step acquisitions of
companies is retained until the date of deconsolidation of the company concerned. In accordance with revised
IAS 27, requiring prospective application, no new revaluation reserves are formed for step acquisitions since the
changes in the fair values of the assets and liabilities of an acquired company arising in between the individual
acquisition dates are taken through profit and loss based on the stake which had not yet triggered consolidation
of the company concerned.
(29) Use of Group profit available for distribution
In accordance with the German Stock Corporation Act, the Annual General Meeting decides the use of the profit
available for distribution included in TUI AG ’s commercial-law annual financial statements. The annual profit of
TUI AG amounted to € 1,256.7 m. After a transfer to the revenue reserves of € 314.0 m and retained profits carried
forward of € 66.7 m, the profit available for distribution amounts to € 1,009.4 m. A proposal will be submitted to
the Annual General Meeting to use the profit available for distribution for the financial year 2014 / 15 to pay a
dividend of € 0.56 per no-par value share or € 328.5 m in total and carry forward the remaining amount of
€ 680.9 m The final dividend total will depend on the number of dividend-bearing no-par value shares at the date
on which the resolution regarding the use of Group profit available for distribution is adopted by the Annual
General Meeting.
(30) Hybrid capital
The subordinated hybrid capital issued by TUI AG in December of financial year 2005 with a nominal volume of
€ 300.0 m was cancelled on 24 March 2015 with effect from 30 April 2015. The borrowing costs incurred for the
issue of the hybrid capital were offset against revenue reserves upon redemption.
NOTES
241
242
NOTES
(31) Non-controlling interests
Non-controlling interests mainly relate to the companies presented in the table below.
SUBSIDIARIES WITH SIGNIFICANT NON-CONTROLLING INTERESTS
Name and headquarter of company
RIUSA II S.A., Palma de Mallorca, Spain
TUI Travel Ltd., Crawley, Great Britain
Nature of business
Hotel operator
Tour operator
Capital share TUI in %
30 Sep 2015
30 Sep 2014
50.0
100.0
50.0
54.1
Capital share non-controlling
interests in %
30 Sep 2015
30 Sep 2014
50.0
–
50.0
45.9
The financial year of RIUSA II S.A. differs from the financial year of TUI Group and ends at 31 December. This
reporting date was determined at the creation of the company. For the preparation of the consolidated financial
statements of TUI Group as at 30 September consolidated financial statements of the RIUSA II Group are prepared as at TUI Group’s balance sheet date 30 September. The financial year of TUI Travel Ltd. corresponds to
the financial year of TUI Group.
The RIUSA II Group, allocated to Hotels & Resorts, operates owned and leased hotels and hotels operated under
management contracts in tourism destinations of the TUI Group. Based on the contractual agreements between
the shareholders and the framework agreements with the TUI Group as well as the considerable importance of
tour operation business for the economic success of the RIUSA II Group, the TUI Group is able to direct the decisions
on the mostrelevant activities. The RIUSA II Group is therefore fully consolidated although the TUI Group only
holds a 50% equity stake.
Following the merger of TUI AG and TUI Travel PLC there are no non-controlling interests in TUI Travel Ltd.
remaining. For a detailed description of the transaction please refer to the section „Merger of TUI AG and
TUI Travel PLC “ within the principles and methods of consolidation.
The following table provides summarised financial information for subsidiaries with material non-controlling
interests. The information disclosed reflects the amounts presented in the consolidated financial statements of
the respective sub groups.
S U M M A R I S E D F I N A N C I A L I N F O R M AT I O N O N S U B S I D I A R I E S W I T H M AT E R I A L N O N - C O N T R O L L I N G I N T E R E S T S
€ million
Current assets
Non-current assets
Current liabilities
RIUSA II S.A.,
Palma de Mallorca, Spain1
30 Sep 2015 /
30 Sep 2014 /
2014 / 15
2013 / 14
TUI Travel Ltd.,
Crawley, Great Britain1
30 Sep 2015 /
30 Sep 2014 /
2014 / 15 2
2013 / 14
294.5
1,242.1
110.3
86.4
232.3
1,172.9
129.4
84.8
–
–
–
–
3,674.3
6,145.4
6,988.8
2,588.4
Revenues
Profit / loss
715.9
177.2
– 8.4
630.8
133.8
16.2
2,335.7
– 109.8
– 20.5
17,865.7
239.4
– 221.6
Cash inflow / outflow from operating activities
Cash inflow / outflow from investing activities
Cash inflow / outflow from financing activities
232.6
– 99.0
– 64.9
179.0
– 94.3
– 44.1
– 1,605.7
– 35.7
524.3
425.6
– 220.8
– 533.3
Accumulated non-controlling interests
Profit / loss attributable to non-controlling interests
Dividends attributable to non-controlling interests
494.1
88.6
10.0
419.4
– 66.9
5.0
–
– 49.6
183.0
– 310.8
113.7
85.9
1
2
Consolidated Subgroup
Until the merger of TUI AG with TUI Travel PLC
(32) Pension provisions and similar obligations
A number of defined contribution plans and defined benefit pension plans are operated for Group employees.
Pension obligations vary, reflecting the different legal, fiscal and economic conditions in each country of operation,
and usually depend on employees’ length of service and pay levels.
All defined contribution plans are funded by the payment of contributions to external insurance companies or
funds. German employees enjoy benefits from a statutory defined contribution plan paying pensions as a function
of employees’ income and the contributions paid in. Several additional industry pension organisations exist for
companies of the TUI Group. Once the contributions to the state-run pension plans and private pension insurance
organisations have been paid, the Company has no further payment obligations. One major private pension fund
is Aegon Levensverzekering N.V. operating the defined contribution pension plans for the main Dutch subsidiaries
of the TUI Group. Contributions paid are expensed for the respective period. In the period under review, the
expenses for all defined contribution plans totalled € 85.8 m (previous year € 85.3 m).
Apart from these defined contribution pension plans, the TUI Group operates defined benefit plans, which usually
entail the formation of provisions within the Company or investments in funds outside the Company.
Within this group, the MER -Pensionskasse V V aG, a private pension fund, in which German companies of the
tourism industry are organised, represents a multi-employer plan, that is classified as a defined benefit plan. In
accordance with the statutes of the plan, the plan participants and the employers pay salary based contributions
into the plan. There are no further obligations pursuant to the statutes of the plan, an additional funding obligation
of the participating companies is excluded explicitly. The paid-in contributions are invested in accordance with the
policies of the pension plan unless they are used within a short term for the rendering of benefits. As the investments
are pooled and not kept separately per participating employer, an allocation of the plan assets to the individual
participating employer is not possible. The risk of investment as well as the biometric risk are jointly shared by all
plan participants. Moreover, the pension fund does not provide any information to participating companies that
NOTES
243
244
NOTES
would allow the allocation of any over- or underfunding or the extent of TUI ’s participation in the plan. Due to
these restrictions, an accounting of the plan in accordance with the requirements of IAS 19 is not possible and the
plan is therefore recognised as if it was a defined contribution plan. In the fiscal year contributions made to
MER -Pensionskasse VvaG amounted to € 5.5 m (previous year € 5.6 m). For the next fiscal year, contributions are
expected to remain stable at this level.
The major pension plans recognised as defined benefit plans exist in particular in Germany and the UK . By far the
largest pension plans are operated by the Group’s tour operators in the UK , accounting for a proportion of 75.3 %
(previous year 74.0 %) of the Group’s total obligations at the balance sheet date. German plans account for a
further 20.2 % (previous year 21.6 %).
In the UK , the following major pension schemes in which pension payments are linked to final salary and length
of service are operated. The final remuneration to be taken into account is capped.
M AT E R I A L D E F I N E D B E N E F I T P L A N S I N G R E AT B R I TA I N
Scheme name
Status
Britannia Airways Limited Superannuation and Life Assurance Scheme
closed
closed
closed
TUI Pension Scheme (UK )
Thomson Airways Pension Scheme
Almost all defined benefit plans in the UK are funded externally. Under UK law, the employer is obliged to ensure
sufficient funding so that plan assets cover the pension payments to be made and the administrative costs of the
funds. The pension funds are managed by independent trustees. The trustees comprise independent members
but also beneficiaries of the plan and employer representatives. The trustees are responsible for the investment
of fund assets, taking account of the interests of plan members, but they also negotiate the level of the contributions
to the fund to be paid by the employers, which constitute minimum contributions to the fund. To this end, actuarial
valuations are made every two years by actuaries commissioned by the trustees. These valuations serve as a
basis to determine the annual contributions to be paid to the fund in order to cover any shortfalls in coverage, last
defined in July 2015. On top of a fixed annual contribution, a certain percentage of the pensionable remuneration
of the plan members has to be paid to the scheme. Additionally, the current agreement replaced formerly existing
result-based additional payments in favour of higher fixed contributions.
By contrast, the defined benefit plans in Germany are unfunded. The obligations entail payments of company
pensions when the beneficiaries reach the legal retirement age. The amount of the pension paid usually depends
on the remuneration received by the staff member at the retirement date. The pension obligations regularly also
comprise surviving dependants’ benefits and invalidity benefits.
M AT E R I A L D E F I N E D B E N E F I T P L A N S I N G E R M A N Y
Scheme name
Status
Versorgungsordnung TUI AG
Versorgungsordnung Hapag-Lloyd Fluggesellschaft GmbH
Versorgungsordnung TUI Deutschland GmbH
Versorgungsordnung TUI Beteiligungs GmbH
Versorgungsordnung Preussag Immobilien GmbH
closed
open
closed
closed
closed
In the period under review, defined benefit pension obligations created total expenses of € 90.9 m for the Group.
Compared to last year, there were no gains from transactions to optimise pension schemes in the current year to
offset the regular expenses for current service costs and interests. Last year, firstly pensioners and later on active plan
members in the UK were offered to exchange promised higher pension increases in the future against immediate
higher pension payments with only limited increases of pensions in the future. These transactions resulted in
negative past service cost of € 75.9 m.
P E N S I O N C O S T S F O R D E F I N E D B E N E F I T O B L I G AT I O N S
2014 / 15
2013 / 14
restated
59.1
1.7
34.4
– 0.9
90.9
43.8
4.7
38.6
– 76.6
1.1
€ million
Current service cost for employee service in the period
Curtailment gains
Net interest on the net defined benefit liability
Past service cost
Total
Provisions for pension obligations are established for benefits payable in the form of retirement, invalidity and
surviving dependants’ benefits. Provisions are exclusively formed for defined benefit schemes under which the
Company guarantees employees a specific pension level. It also includes arrangements for early retirement and
temporary assistance benefits.
D E F I N E D B E N E F I T O B L I G AT I O N R E C O G N I S E D O N T H E B A L A N C E S H E E T
€ million
Present value of funded obligations
Fair value of external plan assets
Deficit of funded plans
Present value of unfunded pension obligations
Defined benefit obligation recognised on the balance sheet
Overfunded plans in Other assets
Provisions for pensions and similar obligations
of which current
of which non-current
30 Sep 2015
Total
30 Sep 2014
Total
2,711.0
2,302.1
408.9
722.8
1,131.7
15.2
1,146.9
32.4
1,114.5
2,523.5
1,980.0
543.5
731.0
1,274.5
–
1,274.5
32.1
1,242.4
NOTES
245
246
NOTES
Remeasurements (in particular actuarial gains and losses) are immediately offset against equity in the year in
which they arise. The total pension obligations, net of fund assets, of the TUI Group are therefore fully recognised
in the statement of financial position.
Where the defined benefit pension obligations are not unfunded, they are funded externally. This type of funding
of pension obligations is common in the UK . For funded pension plans, the provision carried only covers the
shortfall in coverage between the plan assets and the present value of the benefit obligations.
Where plan assets exceed funded pension obligations, taking account of a difference due to past service cost, and
where at the same time there is an entitlement to reimbursement or reduction of future contributions to the
fund, the excess is recognised in conformity with the cap defined by IAS 19.
D E V E L O P M E N T O F D E F I N E D B E N E F I T O B L I G AT I O N S
€ million
Current service cost
Past service cost
Curtailments and settlements
Interest expense (+) / interest income (-)
Pensions paid
Contributions paid by employer
Contributions paid by employees
Remeasurements
due to changes in financial assumptions
due to changes in demographic assumptions
due to experience adjustments
due to return on plan assets not included in group profit for the year
Changes in the group of consolidated companies
Present value
of obligation
Fair value of
plan assets
Total
3,254.5
59.1
– 0.9
– 2.1
114.4
– 132.7
–
1.2
– 6.6
20.5
– 30.2
3.1
–
146.9
–
3,433.8
– 1,980.0
–
–
0.4
– 80.0
99.6
– 149.8
– 1.2
– 75.6
–
–
–
– 75.6
– 115.5
–
– 2,302.1
1,274.5
59.1
– 0.9
– 1.7
34.4
– 33.1
– 149.8
–
– 82.2
20.5
– 30.2
3.1
– 75.6
31.4
–
1,131.7
D E V E L O P M E N T O F D E F I N E D B E N E F I T O B L I G AT I O N S
€ million
Present value
of obligation
Fair value of
plan assets
(restated)
Total
(restated)
2,752.3
43.8
– 76.6
– 9.9
111.8
– 116.0
–
1.2
383.7
341.3
–
42.4
–
164.1
0.1
3,254.5
– 1,616.6
–
–
5.2
– 73.2
80.6
– 145.8
– 1.2
– 97.7
–
–
–
– 97.7
– 131.3
–
– 1,980.0
1,135.7
43.8
– 76.6
– 4.7
38.6
– 35.4
– 145.8
–
286.0
341.3
–
42.4
– 97.7
32.8
0.1
1,274.5
Current service cost
Past service cost
Curtailments and settlements
Interest expense (+) / interest income (-)
Pensions paid
Contributions paid by employer
Contributions paid by employees
Remeasurements
due to changes in financial assumptions
due to changes in demographic assumptions
due to experience adjustments
due to return on plan assets not included in group profit for the year
Changes in the group of consolidated companies
The present value of the pension obligation rose by € 179.3 m to € 3,433.8 m in the financial year under review,
primarily due to foreign exchange effects.
The TUI Group’s fund assets rose even more substantially by € 322.1 m in the period under review. Apart from
foreign exchange effects and contributions made by a UK subsidiary in order to reduce the existing shortfall in
coverage, the considerable increase in fund assets was also driven by the positive investment performance.
C O M P O S I T I O N O F P E N S I O N A S S E T S AT T H E B A L A N C E S H E E T D AT E
€ million
Fair value of fund assets at end of period
of which equities
of which government bonds
of which corporate bonds
of which liability driven investments
of which property
of which growth funds
of which insurance policies
of which catastrophe bonds
of which cash
of which other
30 Sep 2015
Quoted market price
in an active market
yes
no
1,560.2
692.0
292.0
274.8
250.0
–
–
–
–
–
51.4
741.9
–
–
–
–
138.0
89.3
63.7
63.0
246.4
141.5
30 Sep 2014
Quoted market price
in an active market
yes
no
1,398.5
696.4
228.8
193.6
203.9
–
–
–
–
–
75.8
581.5
–
–
–
–
114.6
81.3
66.2
52.6
146.7
120.1
NOTES
247
248
NOTES
At the balance sheet date, as well as in the previous year, there is no direct investment in financial instruments
issued by TUI AG or any of its consolidated subsidiaries or in any property occupied by the group. For funded plans,
investment in passive index tracker funds may hold a proportionate investment in TUI AG financial instruments.
Pension obligations are measured on the basis of actuarial calculations and assumptions. The obligations under
defined benefit plans are calculated on the basis of the internationally accepted projected unit credit method,
taking account of expected future increases in salaries and pensions.
ACTUARIAL ASSUMPTIONS
Percentage p. a.
Discount rate
Projected future salary increases
Projected future pension increases
Percentage p. a.
Discount rate
Projected future salary increases
Projected future pension increases
Germany
Great Britain
30 Sep 2015
Other countries
2.25
2.5
1.75
3.8
2.7
3.6
1.9
1.9
1.4
Germany
Great Britain
30 Sep 2014
Other countries
2.25
2.5
2.0
3.9
2.7
3.3
1.8
2.0
2.1
Determination of the interest rate applicable in discounting the provision for pensions is based on an index for
corporate bonds adjusted for securities already downgraded and under observation by rating agencies as well as
subordinate bonds in order to meet the criterion for high quality bonds required under IAS 19 (bonds with a
rating of A A or higher). In order to cover a correspondingly broad market, an index based on shorter-terms bonds
is used (e. g. iBoxx € Corporates A A 7 – 10 for the Eurozone). The resulting yield structure is extrapolated on the
basis of the yield curves for almost risk-free bonds, taking account of an appropriate risk mark-up reflecting the
term of the obligation.
For pension plans outside of Germany, actuarial calculations are based on country-specific parameters.
Apart from the parameters described above, a further key assumption relates to life expectancy. In Germany, the
Heubeck reference tables 2005G are used to determine life expectancy. In the UK , the S1NxA base tables are used,
which are adjusted to future expected increases on the basis of the CMI 2013. The pension in payment escalation
formulae depends primarily on the pension scheme concerned. Apart from fixed rates of increase, there are also
a number of inflation-linked pension adjustment mechanisms in different countries.
Changes in the key actuarial assumptions mentioned above would lead to the changes in defined benefit obligations
presented below. The methodology used to determine sensitivity corresponds to the method used to calculate
the defined benefit obligation. The assumptions were amended in isolation each time; actual interdependencies
between the assumptions were not taken into account. The effect of the increase in life expectancy by one year
is calculated by means of a reduction in mortality due to the use of the Heubeck tables 2005G for pension plans in
Germany. In the UK , an extra year is added to the life expectancy determined on the basis of the mortality tables.
S E N S I T I V I T Y O F T H E D E F I N E D B E N E F I T O B L I G AT I O N D U E T O C H A N G E D A C T U A R I A L A S S U M P T I O N S
€ million
Discount rate
Salary increase
Pension increase
Life expectancy
30 Sep 2015
+ 50 Basis points – 50 Basis points
– 292.5
+ 23.8
+ 110.3
+ 1 year
+ 114.6
+ 330.5
– 23.0
– 103.5
–
+ 50 Basis points
– 287.6
+ 20.0
+ 96.8
+ 1 year
+ 107.7
30 Sep 2014
– 50 Basis points
+ 331.5
– 18.7
– 78.4
–
The weighted average duration of the defined benefit obligations totalled 18.5 years (previous year 18.9 years)
for the overall Group. In the UK , the weighted duration was 19.7 years (previous year 20.7 years), while it stood at
15.1 years (previous year 15.8 years) in Germany.
Fund assets are determined on the basis of the fair values of the funds invested as at 30 September 2015. The
interest rate used to determine the interest income from the assets of external funds is identical to the discount
rate used for the defined benefit obligation.
For the forthcoming financial year, the companies of the TUI Group are expected to contribute around € 128.5 m
(previous year € 108.8 m) to the pension schemes and pay pensions worth € 32.4 m (previous year € 32.1 m) for
unfunded plans. For funded schemes, payments to the recipients are fully made from fund assets to that the TUI
Group does not record a cash outflow as a result.
The TUI Group’s defined benefit plans entail various risks, some of which may have substantial effects on the
Company.
INVESTMENT RISK
The investment risk plays a major role, in particular for the large funded plans in the UK . Although shares usually
outperform bonds in terms of producing higher returns, they also entail stronger volatility of balance sheet
items and the risk of short-term shortfalls in coverage. In order to limit this risk, the trustees have built a balanced
investment portfolio to limit the concentration of risks.
I N T E R E S T R AT E R I S K
The interest rate influences in particular unfunded schemes in Germany as a decline in interest rates leads to an
increase in the defined benefit obligations. Accordingly, an increase in the interest rate leads to a reduction in the
defined benefit obligations. Funded plans are less strongly affected by this development as the performance of
the interest-bearing assets included in plan assets regularly dampens the effects.
I N F L AT I O N R I S K
An increase in the inflation rate regularly increases the obligation in pension schemes linked to the final salary of
beneficiaries as inflation causes an increase in the assessment basis in the form of salary increases. At the same
time, inflation-based pension increases included in the plan also rise. The inflation risk is reduced through the use
of caps and collars. Moreover, the large pension funds in the UK hold inflation-linked assets, which also partly
reduce the risk from a significant rise in inflation.
NOTES
249
250
NOTES
LONGE VIT Y RISK
An increasing life expectancy increases the expected benefit duration of the pension obligation. This risk is countered by using regularly updated mortality data in calculating the present values of the obligation.
CURRENCY RISK
For the TUI Group, the pension schemes entail a currency risk as most pension schemes are operated in the UK
and therefore denominated in sterling. The risk is limited as the currency effects on the obligation and the assets
partly offset each other. The currency risk only relates to the excess of pension obligations over scheme assets.
(33) Other provisions
D E V E L O P M E N T O F P R OV I S I O N S I N T H E F I N A N C I A L Y E A R 2 0 14 /15
€ million
Maintenance provisions
Risks from onerous contracts
Restructuring provisions
Provisions for other personnel costs
Provisions for other taxes
Provisions for environmental protection
Provision for Litigation
Miscellaneous provisions
Other provisions
Balance as at
30 Sep 2014
restated
Changes with
no effect on
profit and loss*
Usage
Reversal
Additions
Balance as at
30 Sep 2015
482.1
57.9
39.4
41.4
69.1
39.9
103.2
239.6
1,072.6
40.3
1.0
– 0.2
– 5.1
– 51.2
–
– 18.7
94.4
60.5
78.3
19.4
28.7
12.0
1.4
3.5
1.3
77.0
221.6
31.7
1.7
0.4
0.1
0.8
0.3
5.0
17.9
57.9
151.3
10.3
31.8
13.9
11.7
4.4
30.9
101.8
356.1
563.7
48.1
41.9
38.1
27.4
40.5
109.1
340.9
1,209.7
* Reclassifications, transfers, exchange differences and changes in the group of consolidated companies
Provisions for external maintenance primarily relate to contractual maintenance, overhaul and repair requirements for aircraft, engines and other specific components arising from aircraft operating lease contracts. The
measurement of these provisions is based on the expected cost of the next maintenance event, estimated on the
basis of current prices, expected price increases and manufacturers’ data sheets. In line with the arrangements of
the individual contracts and the aircraft model concerned, additions are recognised on a prorated basis in relation
to flight hours, the number of flights or the length of the complete maintenance cycle.
Provisions for onerous contracts principally relate to unfavourable lease contracts. The decrease in the current
financial year is mainly driven by the utilisation of these provisions.
The restructuring provisions primarily relate to restructuring projects within the Northern and Central Region
segments for which detailed, formal restructuring plans have been drawn up and communicated to the parties
concerned. The restructuring provisions included at the balance sheet date of € 41.9 m (previous year € 39.4 m)
largely relate to benefits for employees in connection with the termination of employment contracts.
Provisions for personnel costs comprise provisions for jubilee benefits as well as provisions for share-based payment schemes with cash compensation in accordance with IFRS 2. Information on these long-term incentive
programmes is presented under Note 43 in the section on “Share-based payments in accordance with IFRS 2”.
The provisions for environmental protection measures primarily relate to statutory obligations to remediate sites
contaminated with legacy waste from former mining and metallurgical activities. Estimating the future cost of
remediating contaminated sites entails many uncertainties, which may also impact the amount of provisions. The
measurement is based on assumptions about future costs derived from empirical values, conclusions from environ
mental expert reports and the legal assessment of the Group as well as the expected duration of the remediation
measures. Unwinding these obligations under environmental law takes a long time and constitutes a technically
complex process. Accordingly, there are considerable uncertainties about the actual timeframe and the specific
amount of expenses required so that actual costs may exceed the provisions carried.
Provisions for litigation are established in relation to existing lawsuits. The recognised provisions mainly relate to
the demand for compensation received from the container terminal at Zeebrugge as well as to claims for damages
in relation to hotel lease contracts. Overall the future financial position is unlikely to be substantially affected by
each of these claims.
The changes with no effect on profit and loss primarily relate to foreign exchange translation impacts as well as
to movements within the other provisions.
Where the difference between the present value and the settlement value of a provision is material for the
measurement of a non-current provision as at the balance sheet date, the provision is recognised at its present
value in accordance with IAS 37. The discount rate to be applied should take account of the specific risks of the
provision and of future price increases. This criterion applies to some items contained in the TUI Group’s other
provisions. Additions to other provisions comprise an interest portion of € 4.6 m (previous year € 5.9 m), recognised
as an interest expense.
T E R M S T O M AT U R I T Y O F I N C O M E TA X P R O V I S I O N S A N D O T H E R P R O V I S I O N S
30 Sep 2015
€ million
Maintenance provisions
Risks from onerous contracts
Restructuring provisions
Provisions for other personnel costs
Provisions for other taxes
Provisions for environmental protection
Provisions for litigation
Miscellaneous provisions
Other provisions
Remaining
term more
than 1 year
455.8
23.3
0.2
23.6
22.3
38.4
50.5
132.2
746.3
30 Sep 2014
restated
Total
Remaining
term more
than 1 year
Total
563.7
48.1
41.9
38.1
27.4
40.5
109.1
340.9
1,209.7
359.1
30.8
0.5
23.2
20.8
36.3
77.7
53.2
601.6
482.1
57.9
39.4
41.4
69.1
39.9
103.2
239.6
1,072.6
NOTES
251
252
NOTES
(34) Financial liabilities
FINANCIAL LIABILITIES
30 Sep 2015
€ million
up to 1 year
Convertible bonds
Other bonds
Liabilities to banks
Financial liabilities due to non-consolidated
Group companies
Financial liabilities due to affiliates
Total
Remaining term
more than
5 years
1– 5 years
30 Sep 2014
restated
Total
up to 1 year
Remaining term
more than
5 years
1– 5 years
Total
–
–
61.0
68.9
–
293.7
207.3
280.6
–
–
225.8
632.5
–
293.7
494.1
982.0
28.2
–
53.0
46.8
793.5
–
135.2
137.0
–
292.4
72.5
316.8
821.7
292.4
260.7
500.6
5.2
8.0
90.0
233.1
–
–
13.4
795.0
–
–
–
858.3
5.2
8.0
103.4
1,886.4
5.6
–
83.6
217.2
–
–
1.0
1,066.7
–
–
–
681.7
5.6
–
84.6
1,965.6
Non-current financial liabilities decreased year-on-year by € 94.9 m to € 1,653.3 m as at the balance sheet date.
The decline primarily resulted from the conversion of two convertible bonds totaling € 793.5 m, largely offset by
an increase in non-current liabilities to banks of € 225.4 m and an increase in liabilities from finance leases of
€ 459.3 m to € 913.1 m.
The increase in non-current liabilities to banks to € 433.1 m arises from debt finance associated with the acquisition of the cruise ship Europa 2 and the acquisition of an aircraft.
The increase in liabilities from finance leases mainly results from financing of aircraft.
Current financial liabilities rose by € 15.9 m to € 233.1 m year-on-year as at 30 September 2015.
FA I R VA L U E S A N D C A R RY I N G A M O U N T S O F T H E B O N D S I S S U E D ( 3 0 S E P 2 0 15 )
30 Sep 2015
€ million
2009 / 14
convertible
bond
2011 / 16
convertible
bond
2014 / 19 bond
2009 / 14
convertible
bond
2010 / 17
convertible
bond
Total
2005 / -hybrid capital
Issuer
Volume
Volume
initial outstanding
Interest
rate % p. a.
Stock
market
value
30 Sep 2014
Carrying
amount
Stock
market
value
Carrying
amount
TUI AG
217.8
–
5.500
–
–
54.3
25.2
TUI AG
338.9
300.0
–
300.0
2.750
4.500
–
314.4
–
293.7
388.7
306.0
317.1
292.4
TUI AG
TUI Travel PLC GBP 350.0 GBP –
6.000 GBP –
– GBP 2.3
3.0
TUI Travel PLC GBP 400.0 GBP –
4.900 GBP –
314.4
– GBP 474.4
293.7
1,362.3
476.4
1,114.1
TUI AG
300.0
–
3M EURIBOR
plus 7.300
–
–
308.2
294.8
On 17 November 2009, TUI AG issued a five-year convertible bond worth € 217.8 m. This bond carried a fixed-
interest coupon of 5.5 % per annum. It was issued at denominations of € 56.30. As at 30 September 2014, the
nominal volume outstanding totalled € 25.5 m. In the period under review, € 23.1 m of that total were converted,
while the remaining amount of € 2.4 m plus accumulated interest was repaid at maturity on 17 November 2014.
The convertible bond with a nominal value of € 339.0 m issued by TUI AG on 24 March 2011 was called early in the
period under review and was almost fully converted by the end of the conversion period on 20 March 2015. The
remaining bonds worth € 2.4 m were repaid at their nominal value plus interest on 7 April 2015.
On 26 September 2014, TUI AG issued a high-yield bond with a coupon of 4.5 % p. a. with a nominal volume of
€ 300.0 m. The bond was issued in denominations of € 100,000 each. It will mature on 1 October 2019.
On 1 October 2009, TUI Travel PLC issued a convertible bond with a nominal value of £ 350.0 m with a fixed-
interest coupon of 6.0 % per annum and a conversion price of £ 3.493 per no-par value share, maturing on 5 October 2014. The bond was issued in denominations of £ 100,000. Following the end of the conversion period, the
volume of the bond outstanding as at 30 September 2014 was £ 2.3 m. Non-converted bonds were repaid at their
nominal amount plus accumulated interest at final maturity.
The convertible bond with a nominal volume of £ 400.0 m, issued by TUI Travel PLC on 22 April 2010 was almost
fully converted in financial year 2014 / 15. In the framework of the merger between TUI Travel PLC and TUI AG ,
the bondholders had a special redemption right, subsequently used for conversion by many of the external bondholders. Further convertible bonds with a nominal value of £ 200 m were early redeemed by TUI AG . TUI AG had
obtained the legal title on these bonds with the early redemption of a financing agreement in January 2015. On
3 March 2015, TUI Travel Ltd. announced early redemption of the remaining bonds. All bonds still outstanding
were converted by the bondholders by the end of the conversion period on 17 April 2015.
NOTES
253
254
NOTES
With effect from 30 April 2015, TUI AG cancelled its perpetual subordinated bond (“hybrid bond”) with a nominal
value of € 300.0 m. Due to the cancellation, the hybrid bond was reclassified from equity to financial liabilities in
March 2015. The bond was repaid at nominal value plus accrued interest at the end of April 2015.
(35) Trade accounts payable
T R A D E PAYA B L E S
30 Sep 2015
30 Sep 2014
restated
3,181.2
5.8
37.2
3,224.2
3,224.4
6.0
61.7
3,292.1
€ million
To third parties
To non-consolidated Group companies
To affiliates
Total
(36) Derivative financial instruments
D E R I VAT I V E F I N A N C I A L I N S T R U M E N T S
30 Sep 2015
€ million
up to 1 year
Liabilities from derivative financial
instruments to third parties
388.2
Remaining term
more than
5 years
1– 5 years
78.5
–
30 Sep 2014
restated
Total
up to 1 year
466.7
241.9
Remaining term
more than
5 years
1– 5 years
20.7
–
Total
262.6
Derivative financial instruments are included at their fair values (market values). They mainly serve to hedge future
business operations and are detailed in the explanatory information on financial instruments.
(37) Deferred and current tax liabilities
D E F E R R E D A N D C U R R E N T TA X L I A B L I T I E S
30 Sep 2015
30 Sep 2014
restated
125.7
194.6
320.3
144.8
199.7
344.5
€ million
Total
Deferred tax liabilities include an amount of € 105.5 m (previous year € 119.1.m) to be realised after more than
twelve months.
(38) Other liabilities
OTHER LIABILITIES
30 Sep 2015
€ million
Other liabilities due to non-consolidated
Group companies
Other liabilities due to affiliates
Other liabilities relating to other taxes
Other liabilities relating to social security
Other liabilities relating to employees
Other liabilities relating to members
of the Boards
Advance payments received
Other miscellaneous liabilities
Other liabilities
Deferred income
Total
Remaining term
up to 1 year
1– 5 years
30 Sep 2014
restated
Remaining term
Total up to 1 year
1– 5 years
Total
3.6
29.1
41.9
47.2
273.4
–
8.0
–
–
13.8
3.6
37.1
41.9
47.2
287.2
5.0
38.0
48.3
44.2
282.0
–
0.3
–
–
10.5
5.0
38.3
48.3
44.2
292.5
4.2
2,568.3
205.0
3,172.7
74.6
3,247.3
–
13.5
25.7
61.0
75.2
136.2
4.2
2,581.8
230.7
3,233.7
149.8
3,383.5
0.3
2,435.7
215.2
3,068.7
65.9
3,134.6
–
11.8
63.2
85.8
44.7
130.5
0.3
2,447.5
278.4
3,154.5
110.6
3,265.1
(39) Liabilities related to assets held for sale
In the period under review, liabilities related to assets held for sale amounted to € 31.5 m (previous year none).
They related to the discontinued operation LateRooms Group.
(40) Contingent liabilities
As at 30 September 2015, contingent liabilities amount to € 364.4 m (previous year € 375.1 m). Contingent liabilities
are reported at an amount representing the best estimate of the potential expenditure that would be required to
meet the potential obligation as at the balance sheet date.
Contingent liabilities as at 30 September 2015 are principally attributable to the granting of guarantees for the
benefit of Hapag-Lloyd AG and TUI Cruises GmbH for collateralised ship financing schemes. The year-on-year
decline versus 30 September 2014 mainly results from the return of guarantees and from redemption payments,
which more than offset the increase resulting from contingent liabilities newly entered into.
NOTES
255
256
NOTES
In the course of financial year 2011 / 12, the German tax administration issued a decree on the interpretation of the
trade tax act, amended with effect from financial year 2008. This decree, only binding for the tax administration,
is interpreted by the German tax administration as indicating that expenses of German tour operators for the
purchase of hotel beds are not fully deductible in determining the basis for the assessment of trade tax. TUI Group
does not share that view, in particular as hotel purchasing contracts are mixed contracts also covering catering,
cleaning, entertaining guests and other services characterising the purchase service.
As the Group has concluded many different contracts to purchase the same service, quantifying this risk in the
event the tax administration enforces its view entails a significant element of uncertainty. Should TUI Group’s
legal interpretation be adopted, there is no risk.
Should TUI Group’s legal interpretation be rejected, a risk of around € 42 m (previous year € 113 m) might arise for
the period since 2008. This change reflects the reassessment of the risk.
(41) Litigation
Neither TUI AG nor any of its subsidiaries have been involved in pending or foreseeable court or arbitration
proceedings which might have a significant impact on their economic position as at 30 September 2015. This also
applies to actions claiming warranty, repayment or any other compensation brought forward in connection with
the divestment of subsidiaries and business units over the past few years.
In 1999, the operator of the container terminal in Zeebrugge in Belgium filed an action for damages against
CP Ships Ltd. – still part of TUI Group – and some of its subsidiaries due to an alleged breach of contract in
connection with switching the Belgian port of call from Zeebrugge to Antwerp. Following first oral proceedings in
September 2013, the court ruled against two subsidiaries of CP Ships Ltd. in October 2013 and dismissed the
action against all other defendants (including CP Ships Ltd.). Both parties have appealed so that the action is now
only pending against the two subsidiaries of CP Ships Ltd. and CP Ships Ltd. itself. Moreover, the CP Ships companies would have rights of recourse against solvent third parties in the event of an adverse final judgment.
As in previous years, the respective Group companies recognised adequate provisions, partly covered by expected
insurance benefits, to cover all potential financial charges from court or arbitration proceedings. Overall, the future
financial position is therefore unlikely to be substantially affected by such charges.
(42) Other financial commitments
NOMINAL VALUE S OF OTHE R FINANCIAL COMMIT ME NT S
30 Sep 2015
€ million
Order commitments in respect
of capital expenditure
Other financial commitments
Total
Fair value
up to 1 year
275.1
39.2
314.3
307.5
Remaining term
more than
5 years
1– 5 years
1,969.8
75.2
2,045.0
1,912.9
1,682.8
–
1,682.8
1,399.5
30 Sep 2014
Total
up to 1 year
3,927.7
114.4
4,042.1
3,619.9
589.8
56.1
645.9
631.7
Remaining term
more than
5 years
1– 5 years
1,603.6
154.6
1,758.2
1,644.7
967.5
–
967.5
809.7
Total
3,160.9
210.7
3,371.6
3,086.1
The fair value of other financial commitments was determined by means of discounting future expenses using a
customary market interest rate of 2.25 % per annum (previous year 2.25 % p. a.).
NOTES
257
Order commitments in respect of capital expenditure relating almost exclusively to Tourism increased by € 766.8 m
year-on-year as at 30 September 2015. This was primarily due to new order commitments for cruise ships arising
under finance leases entered into by a subsidiary of the TUI Group with TUI Cruises GmbH, a joint venture of
TUI AG . Order commitments for aircraft decreased slightly in the financial year under review due to the commissioning of additional aircraft and aircraft equipment offset by deliveries and current down payments. The decline
was partly offset by foreign exchange effects for liabilities denominated in non-functional currencies.
F I N A N C I A L C O M M I T M E N T S F R O M O P E R AT I N G L E A S E , R E N TA L A N D C H A R T E R C O N T R A C T S
30 Sep 2015
€ million
up to
1 year
Aircraft
Hotel complexes
Travel agencies
Administrative buildings
Yachts and motor boats
Other
Total
Fair value
401.4
231.9
74.1
54.6
96.9
26.8
885.7
866.1
Remaining term
more than
10 years
1– 5 years 5– 10 years
1,219.5
462.4
143.1
129.7
97.6
26.9
2,079.2
1,944.9
508.6
90.9
38.7
76.1
0.5
8.8
723.6
605.7
15.2
8.4
7.8
67.1
–
56.3
154.8
123.9
30 Sep 2014
restated
Total
up to
1 year
2,144.7
793.6
263.7
327.5
195.0
118.8
3,843.3
3,540.6
363.8
225.1
74.1
58.9
118.2
29.0
869.1
850.0
Remaining term
more than
10 years
1– 5 years 5– 10 years
1,090.4
537.6
148.8
149.2
248.3
33.9
2,208.2
2,065.6
523.7
102.1
45.6
96.0
135.2
4.5
907.1
759.2
The fair value of financial commitments from lease, rental and charter agreements was determined by means of
discounting future expenses using a standard market interest rate of 2.25 % p. a. (previous year 2.25 % p. a.).
The commitments from lease, rental and charter agreements exclusively relate to leases that do not transfer all
the risks and rewards of ownership of the assets to the companies of the TUI Group in accordance with IFRS rules
(operating leases).
Operating leases for aircraft do not include a purchase option. Current lease payments usually do not include any
maintenance costs. The basic lease term is usually around 8 years on average.
The decrease in commitments compared to 30 September 2014 arises mainly from the acquisition of Europa 2,
which had been leased under a lease agreement until January 2015. An opposite effect resulted from the commissioning of several aircraft, causing an increase in lease obligations for aircraft.
(43) Share-based payments in accordance with IFRS 2
M U LT I - A N N U A L B O N U S PAY M E N T
The long-term incentive programme for Board members is based on phantom shares. In each financial year, a new
period of performance measurements commences, spanning the current plus the following three financial years.
As a result, each performance measurement period has a general term of four years. All Board members have
their individual target amount defined in their contract of employment; which is translated at the beginning of
each performance measurement period into phantom shares on the basis of the average price of TUI AG shares
(‘preliminary number of phantom shares’). The average share price is determined on the basis of share prices
during the 20 days prior to the beginning of any financial year. The entitlement under the long-term incentive
programme arises upon completion of the four-year performance period.
58.2
8.5
9.5
67.6
17.6
21.4
182.8
146.4
Total
2,036.1
873.3
278.0
371.7
519.3
88.8
4,167.2
3,821.2
258
NOTES
Upon the completion of the four-year performance period, the preliminary number of phantom shares is multiplied
by the degree of target achievement. This degree is determined by the rank achieved by TUI AG when comparing
the total shareholder return ( TSR ) of companies listed in the “Dow Jones Stoxx 600 Travel & Leisure” index. The
rank is subsequently translated into a percentage, which is the degree of target achievement. If the degree of
target achievement is less than 25 %, no preliminary phantom shares are remunerated. If the degree of target
achievement exceeds 25 %, it is multiplied by the number of preliminary phantom shares granted; however, a cap of
175 % applies. At the end of the four-year performance period, the number of phantom shares determined in this
way is multiplied by the average price (20 trading days) of TUI AG shares, and the resulting amount is paid out in cash.
The maximum amount payable under the long-term incentive programme has been capped for each individual.
If the condition mentioned above is met, upon expiry of the performance period, the awards are automatically
exercised. If the conditions are not met, the awards are forfeited. The service period will be restricted to the end
of the employment period if plan participants leave the Company, as long as employment is not terminated due
to significant reason within the sphere of responsibility of the participant or by the participant without cause.
The fair value of the phantom shares granted in financial year 2014 / 15 is recognised as remuneration for the
current financial year based on a degree of target achievement of 100 %.
STOCK OPTION PL AN
Bonuses are granted to Group executives entitled to receive a bonus; the bonuses are also translated into phantom
shares in TUI AG on the basis of an average share price. For Executive Board members, the stock option plan was
terminated upon the introduction of the multi-annual bonus.
The phantom shares are calculated on the basis of Group earnings before interest, taxes and amortisation of
goodwill (EBITA ). The translation into phantom shares is based on the average share price of the TUI share on
the 20 trading days following the Supervisory Board meeting at which the annual financial statements are approved.
The number of phantom shares granted in a financial year is therefore only determined in the subsequent year.
Following a lock-up period of two years, the individual beneficiaries are free to exercise their right to cash payment
from this bonus within three years. Following significant corporate news, the entitlements have to be exercised
within defined timeframes. The lock-up period is not applicable if a beneficiary leaves the Company; in that case,
the entitlements have to be exercised in the next time window. The level of the cash payment depends on the
average share price of the TUI share over a period of 20 trading days after the exercise date. There are no absolute
or relative return or share price targets. A cap has been agreed for exceptional, unforeseen developments. Since the
strike price is € 0.0 and the incentive programme does not entail a vesting period, the fair value corresponds to the
intrinsic value and hence the market price at the balance sheet date. Accordingly, the fair value of the obligation is
determined by multiplying the number of phantom shares with the share price at the respective reporting date.
Phantom shares developed as follows for the two remuneration schemes:
DEVELOPMENT OF PHANTOM SHARES
Phantom shares granted
Phantom shares exercised
Measurement results
Phantom shares forfeited
Measurement results
Number
of shares
Present value
€ million
1,724,055
357,484
900,497
–
1,181,042
779,616
497,970
69,116
–
1,393,572
15.1
4.2
9.3
4.0
14.0
9.7
8.3
0.8
8.2
22.8
The multi-annual bonus and the stock option plan are recognised as payments with cash compensation. As at
30 September 2015 provisions relating to entitlements under these long-term incentive programmes totaled € 15.2 m
and further € 1.5 m were included as liabilities (previous year provisions of € 13.2 m and no liabilities). Within the
stock option plan 182,438 phantom shares (value equivalent to € 3.0 m) vested as at 30 September 2015.
In financial year 2014 / 15, personnel expenses due to share-based payment schemes with cash compensation of
€ 8.0 m (previous year € 7.8 m) were recognised through profit and loss.
E MPLOYE E SHARE S
TUI AG offers shares at preferential conditions for purchase by eligible employees in Germany and some European
countries. The purchase entails a lock-up period of two years. In financial year 2014 / 15, a total of 133,340 employee
shares that employees had subscribed to in the prior year were issued. The subscription period for employee
shares in financial year 2014 / 15 expired on 23 September 2015. Employees subscribed to 181,280 employee shares,
to be issued in the following financial year. Personnel costs recognised through profit and loss, i.e. the difference
between the current share price as at the balance sheet date and the reduced purchase price, amount to € 0.9 m.
S H A R E - B A S E D PAY M E N T S C H E M E S I N T U I A G S U B S I D I A R I E S
After completion of the merger between TUI Travel PLC and TUI AG on 11 December 2014 all members of the
TUI Group Executive Board received new contracts of employment. With retroactive effect to 1 October 2014 all
members of the TUI Group Executive Board are participating in the above-mentioned scheme of multi-annual
bonus payment. Therefore, since the beginning of the financial year, the remuneration schemes described below
are no longer granted to former TUI Travel PLC executive directors that now form part of the TUI AG board of
executives. In the scheme of arrangement of the merger TUI AG committed to fulfil existing entitlements to
share-based payments (‘roll-over’). Therefore outstanding awards of Executive Board members based on former
TUI Travel PLC contracts of employment will be remunerated at maturity. Equity-settled share-based payments
will be made in TUI AG shares converted from the TUI Travel entitlements at the conversion rate of 0.399 new
TUI AG shares for each TUI Travel share as agreed in the merger documentation.
Certain beneficiaries (except for the Executive Board members) are still eligible to receive awards under the three
remuneration schemes described below. Prior to the merger between TUI Travel PLC and TUI AG , the schemes
operated by TUI Travel PLC businesses were equity-settled and all outstanding awards remain equity-settled. All
awards granted under the schemes after the merger will be settled in cash.
NOTES
259
260
NOTES
The three principal share-based payment schemes linking executive remuneration to the future performance of
the company are: a Performance Share Plan (PSP ), a Deferred Annual Bonus Scheme (DABS ) and a Deferred
Annual Bonus Long-Term Incentive Scheme (DABLIS ). These incentive schemes are offered to participants free
of charge and entail both lock-up periods and performance conditions.
The share awards of all remuneration schemes will only vest if the average annual return on invested capital
(ROIC ) is at least equal to the average weighted average cost of capital ( WACC ) over a period of three years. If this
condition is fulfilled, the number of vesting awards are determined as a function of the fulfilment of the following
performance conditions.
PERFORMANCE SHARE PL AN (PSP)
Up to 50 % of these awards granted will vest based on growth in the Group’s reported earnings per share (EPS )
in excess of growth in the UK Retail Price Index. Up to 25 % of the awards will vest based on the Group’s total
shareholder return ( TSR ) performance relative to an average of the TSR performance of an index of other capital
market-orientated travel and tourism companies. Likewise, up to 25 % of the awards vest if the Group’s average
return on invested capital (ROIC ) meets predefined targets.
DEFERRED ANNUAL BONUS SCHEME (DABS)
The awards granted under this scheme vest upon completion of a three-year period at the earliest.
Up to 50 % of the granted awards will vest based on growth in earnings per share (EPS ) relative to the UK Retail
Price Index (RPI ). 25 % of the awards will vest based on total shareholder return ( TSR ) performance relative to
the TSR performance of other capital market-oriented travel and tourism companies. Likewise, up to 25 % of the
awards will vest if the average return on invested capital (ROIC ) meets certain targets.
D E F E R R E D A N N U A L B O N U S L O N G -T E R M I N C E N T I V E S C H E M E ( D A B L I S )
The Deferred Annual Bonus Long-Term Incentive Scheme (DABLIS ), for executive staff (except for the Executive
Board) requires a 25 % conversion of any annual variable compensation into shares. Some eligible staff have
been awarded further (matching) share awards as additional bonuses. Matching shares are limited to four
times the converted amount. The earliest point for the shares to be eligible for release is similarly at the end of a
three-year period.
Up to 50 % of the awards will vest based on achievement of certain EBITA targets. Up to 25 % of awards will vest
based on the earnings per share (EPS ) performance relative to the UK Retail Price Index and up to 25 % based
on the total shareholder return ( TSR ) performance in relation to the TSR performance of other capital market-oriented travel and tourism companies.
The following schedules relate to the outstanding awards under the TUI Travel equity-settled schemes and show
the number of TUI Travel Limited shares which remain outstanding following conversion into TUI AG shares at
the conversion rate of 0.399 new TUI AG shares for each TUI Travel share as agreed in the merger documentation.
The vesting schedule for the awards was as follows as at 30 September 2015:
S H A R E AWA R D S C H E M E S A N D O R D I N A R Y S H A R E S O U T S TA N D I N G
Performance Share Plan (PSP )
Deferred Annual Bonus Scheme (DABS )
Deferred Annual Bonus Long Term Incentive Scheme (DABLIS )
Total
30 Sep 2015
Number
of shares
30 Sep 2014
Number
of shares
–
–
732,594
486,203
–
1,393,129
925,025
–
808,039
681,508
5,026,498
1,214,096
77,103
738,838
511,339
2,075,061
1,395,470
976,878
1,435,845
840,113
735,507
10,000,250
Date due to vest /
date vested
7 December 2014
1 June 2015
6 December 2015
12 December 2016
7 December 2014
6 December 2015
12 December 2016
7 December 2014
6 December 2015
12 December 2016
The development of awards already granted is as follows:
DEVELOPMENT OF THE NUMBER OF SHARE OPTIONS
Number
Outstanding at beginning of the financial year
Forfeited during the year
Exercised during the financial year
Granted during the financial year
10,000,250
– 222,497
– 4,751,255
–
5,026,498
The weighted average TUI Travel PLC share price was 452 pence at exercise date (translated to € 5.81, previous
year 387 pence or € 4.52). The weighted average remaining contractual life of options not exercised is 0.61 years
at 30 September 2015 (previous year 0.93 years). In addition to the above shares, the deferral of variable compensation into share awards means that 558,154 shares (previous year 1,122,556 shares) are still outstanding under
DABS and 799,354 (previous year 1,781,444) under DABLIS. The awards will vest between 6 December 2015 and
12 December 2016.
NOTES
261
262
NOTES
The fair value of services received in return for shares awarded during the financial year was measured by reference
to the fair value of the equity instruments awarded. The fair value at the date the share awards were granted is
usually estimated using a binominal methodology, except where there is a market-based performance condition
attached to vesting. In that case a Monte Carlo simulation is used for the estimate.
I N F O R M AT I O N R E L AT I N G T O FA I R VA L U E S O F S H A R E S AWA R D E D
Fair values at measurement date
Share price
Expected volatility
Award life
Expected dividends
Risk free interest rate
€
€
%
%
%
2014 / 15
2013 / 14
–
–
–
–
–
–
5.32 – 10.58
12.16
30.60
3 years
4.67
0.78
Participants are not entitled to dividends prior to vesting. Expected volatility is based on historic volatility adjusted
for changes to future volatility indicated by publicly available information.
In financial year 2014 / 15, personnel costs of € 20.1 m (previous year € 23.9 m) relating to share-based payment
schemes involving compensation by equity instruments were carried through profit and loss.
Eligible beneficiaries are included in a cash-settled (Phantom) scheme. Calculation of the cash settlement is based
on the same criteria as those used for settlement by equity instruments. In the financial year 2014 / 15, this gave
rise to staff costs of € 10.9 m (previous year € 2.7 m). As at 30 September 2015 provisions relating to entitlements
under these long-term incentive programmes totaled € 11.2 m and were classified as accruals.
The schedule below shows the development of outstanding cash-settled phantom shares as at 30 September 2015:
D E V E L O P M E N T O F P H A N T O M S H A R E S G R A N T E D AT S U B - G R O U P L E V E L
Phantom shares forfeited
Measurement results
Number
of shares
Present value
€ million
410,006
1,579,926
– 185,987
– 199,559
–
1,604,386
4.9
26.3
– 3.1
– 3.3
1.9
26.7
(44) Financial instruments
RISKS AND RISK MANAGEMENT
RISK MANAGEMENT PRINCIPLE S
Due to the nature of its business operations, the TUI Group is exposed to various financial risks, including market
risks (consisting of currency risks, interest rate risks and market price risks), credit risks and liquidity risks.
In accordance with the Group’s financial goals, financial risks have to be mitigated. In order to achieve those goals,
policies and procedures applicable within TUI Group have been developed, ensuring responsibilities for all financial
transactions undertaken.
Due to the merger of TUI AG and TUI Travel PLC the cash management activities and the financial risk management of both companies was combined at corporate level.
The rules, competencies and workflows as well as limits for transactions and risk positions have been defined in
policies. The trading, processing and control have been segregated in functional and organisational terms. Compliance with the policies and limits is continually monitored. All hedges by the Group are consistently based on
correspondingly recognised or future forecasted underlying transactions. Recognised standard software is used
for assessing, monitoring and reporting as well as documenting and reviewing the effectiveness of the hedging
relationships for the hedges entered into. In this context, the fair values of all derivative financial instruments
determined on the basis of the Group’s own systems are regularly compared with the fair value confirmations of
the external counterparties. The processes, the methods applied and the organisation of risk management are
reviewed for compliance with the relevant regulations on at least an annual basis by the internal audit department
and external auditors.
Within the TUI Group, financial risks primarily arise from cash flows in foreign currencies, fuel requirements (jet
fuel and bunker oil) and financing via the money and capital markets. In order to limit the risks from changes in
exchange rates, market prices and interest rates for underlying transactions, TUI uses derivative over-the-counter
financial instruments. These are primarily fixed-price transactions. In addition, TUI also uses options and structured products. Use of derivative financial instruments is confined to internally fixed limits and other regulations.
The transactions are concluded on an arm’s length basis with contracting counterparties operating in the financial
sector, whose counterparty risk is regularly monitored. Foreign exchange translation risks from the consolidation
of Group companies not preparing their accounts in euros are not hedged.
Accounting and measurement of financial instruments is in line with IAS 39.
MARKET RISK
Market risks result in fluctuations in earnings, equity and cash flows. In order to limit or eliminate these risks, the
TUI Group has developed various hedging strategies, including the use of derivative financial instruments.
According to IFRS 7, market risks have to be presented using sensitivity analyses showing the effects of hypothetical
changes in relevant risk variables on profit or loss and equity. The effects for the period are determined by relating
the hypothetical changes in risk variables to the portfolio of primary and derivative financial instruments as at the
balance sheet date. It is ensured that the portfolio of financial instruments as at the balance sheet date is represen
tative for the entire financial year.
The analyses of the TUI Group’s risk reduction activities outlined below and the amounts determined using
sensitivity analyses represent hypothetical and thus uncertain disclosures entailing risks. Due to unforeseeable
developments in the global financial markets, actual results may deviate substantially from the disclosures provided.
The risk analysis methods used must not be considered a projection of future events or losses, since the TUI
Group is also exposed to risks of a non-financial or non-quantifiable nature. These risks primarily include souvereign,
business and legal risks not covered by the following presentation of risks.
CURRENCY RISK
The business operations of the TUI Group’s companies generate payments or receipts denominated in foreign
currencies, which are not always matched by congruent payments or receipts with equivalent terms in the same
currency. Using potential netting effects (netting of payments made and received in the same currency with identical
or similar terms), the TUI Group enters into appropriate hedges with external counterparties in order to protect
its profit margin from exchange rate-related fluctuations.
NOTES
263
264
NOTES
Within the TUI Group, risks from exchange rate fluctuations are hedged, with the largest hedging volumes relating
to US dollars, euros and pound sterling. The Eurozone limits the currency risk from transactions in the key tourist
destinations to Group companies whose functional currency is not the euro. The tourism business operations are
mainly affected by changes in the value of the US dollar and the euro, the latter predominantly affecting the TUI
tour operators in the UK and the Nordic countries. In tourism operations, payments in US dollars primarily relate
to the procurement of services in non-European destinations, purchases of jet fuel and ship fuel and aircraft
purchases or charter.
The tourism companies use financial derivatives to hedge their planned foreign exchange requirements. They aim
to cover 80 % to 100 % of the planned currency requirements at the beginning of the tourism season concerned.
In this regard, account is taken of the different risk profiles of the Group companies. The hedged currency volumes
are adjusted in line with changes in planned requirements on the basis of reporting by business units.
Currency risks within the meaning of IFRS 7 arise from primary and derivative monetary financial instruments
issued in a currency other than the functional currency of a company. Exchange rate-related differences from the
translation of financial statements into the Group’s presentation currency are not taken into account. Taking
account of the different functional currencies within the TUI Group, the sensitivity analyses of the currencies
identified as relevant risk variables are presented below. A 10 % strengthening or weakening of the respective
functional currencies, primarily euro and pound sterling, against the other currencies would cause the following
effects on the revaluation reserve and earnings after tax:
S E N S I T I V I T Y A N A LY S I S – C U R R E N C Y R I S K
€ million
Variable: Foreign exchange rate
Exchange rates of key currencies
€ / US dollar
Revaluation reserve
Earnings after income taxes
€ / Pound sterling
Revaluation reserve
Pound sterling / US dollar
Revaluation reserve
€ / Swiss franc
Revaluation reserve
€ / Swedish krona
Revaluation reserve
+ 10 %
30 Sep 2015
– 10 %
+ 10 %
30 Sep 2014
– 10 %
– 102.3
– 8.0
+ 102.4
+ 9.8
– 105.7
– 7.8
+ 105.7
+ 9.5
– 203.8
– 150.5
+ 203.8
+ 152.4
– 119.0
– 93.3
+ 119.0
+ 95.3
– 97.9
– 13.5
+ 97.9
+ 13.5
– 95.7
– 1.9
+ 95.7
+ 1.9
+ 0.7
– 0.2
– 0.7
+ 0.2
+ 4.1
+ 0.3
– 4.5
– 0.3
+ 21.0
–
– 21.0
–
+ 19.4
–
– 11.3
–
I N T E R E S T R AT E R I S K
The TUI Group is exposed to interest rate risks from floating-rate primary and derivative financial instruments.
Where interest-driven cash flows of floating-rate primary financial instruments are converted into fixed cash flows
due to derivative hedges, they are not exposed to an interest rate risk. No interest rate risk exists for fixed-interest
financial instruments carried at amortised cost.
Changes in market interest rates mainly impact floating-rate primary financial instruments and derivative financial
instruments entered into in order to reduce interest-induced cashflow fluctuations.
The table below presents the equity and earnings effects of an assumed increase or decrease in the market interest
rate of 50 base points as at the balance sheet date.
S E N S I T I V I T Y A N A LY S I S – I N T E R E S T R AT E R I S K
€ million
Variable: Interest rate level for floating interest-bearing debt
and fixed-interest bearing loans
Revaluation reserve
+ 50 basis
points
30 Sep 2015
– 50 basis
points
+ 50 basis
points
30 Sep 2014
– 50 basis
points
–
+ 0.3
–
–
+ 0.3
+ 1.6
+ 0.2
– 1.4
FUEL PRICE RISK
Due to the nature of its business operations, the TUI Group is exposed to market price risks from the purchase
of fuels, both for the aircraft fleet and the cruise ships.
The tourism companies use financial derivatives to hedge their exposure to market price risks for the planned
consumption of fuel. At the beginning of the touristic season the target hedging ratio is at least 80 %. The different
risk profiles of the Group companies operating in different source markets are taken into account, including
possibilities of levying fuel surcharges. The hedging volumes are adjusted to changes in planned consumption on
the basis of the reports from the Group companies.
If the commodity prices, which underlie the fuel price hedges, would increase or decrease by 10 % on the balance
sheet date, the result on equity and on earnings after income taxes would be shown on the table below.
S E N S I T I V I T Y A N A LY S I S – F U E L P R I C E R I S K
€ million
Variable: Fuel prices for aircraft and ships
+ 10 %
30 Sep 2015
– 10 %
+ 10 %
30 Sep 2014
– 10 %
Revaluation reserve
+ 62.4
– 0.1
– 61.6
– 0.3
+ 80.2
–
– 80.2
–
NOTES
265
266
NOTES
OTHER PRICE RISKS
Apart from the financial risks that may result from changes in exchange rates, commodity prices and interest
rates, the TUI Group is exposed to other price risks due to one-off items.
For the sensitivity analysis of these one-off items, reference is given to the comments on the development of the
value of Level 3 financial instruments.
S E N S I T I V I T Y A N A LY S I S – O T H E R P R I C E R I S K S
€ million
Variable: Other market values, cash flows
Revaluation reserve
Equity – Available for sale financial instruments
+ 10 %
30 Sep 2015
– 10 %
+ 10 %
30 Sep 2014
– 10 %
–
–
–
–
–
–
+ 14.1
–
+ 0.4
– 17.0
–
– 0.4
CREDIT RISK
The credit risk in non-derivative financial instruments results from the risk of counterparties defaulting on their
contractual payment obligations.
Maximum credit risk exposure corresponds in particular to the total of the recognised carrying amounts of the
financial assets (including derivative financial instruments with positive market values). It also relates to the granting
of financial guarantees for the discharge of liabilities. Details concerning the guarantees at the balance sheet date
are presented in Note 40. Legally enforceable possibilities of netting financial assets and liabilities are taken into
account. Credit risks are reviewed closely on conclusion of the contract and continually monitored thereafter so
as to be able to swiftly respond to potential impairments in a counterparty’s solvency. Responsibility for handling
the credit risk is always held by the respective Group companies of the TUI Group.
Since the TUI Group operates in many different business areas and regions, significant credit risk concentrations of
receivables from and loans to specific debtors or groups of debtors are not to be expected. A significant concentration of credit risks related to specific countries is not to be expected either. The maximum credit risk is reduced
by collateral held and other credit enhancements of € 1.1 m (previous year € 1.1 m). Collateral held relates exclusively
to financial assets of the category Trade receivables and other receivables. The collateral mainly comprises collateral
for financial receivables granted and maturing in more than one year and / or with a volume of more than € 1 m.
Rights in rem, directly enforceable guarantees, bank guarantees and comfort letters are used as collateral.
Identifiable credit risks of individual receivables are covered by means of corresponding bad debt allowances. In
addition, portfolios are impaired based on empirical values. An analysis of the aging structure of the category
Trade receivables and other assets is presented in Note 20.
At the balance sheet date, there were no financial assets that would be overdue or impaired unless the terms and
conditions of the contract had been renegotiated, neither in financial year 2014 / 15 nor in 2013 / 14.
Credit management also covers the TUI Group’s derivative financial instruments. The maximum credit risk for
derivative financial instruments entered into is limited to the total of all positive market values of these instruments
since in the event of counterparty default asset losses would only be incurred up to that amount. Since derivative
financial instruments are concluded with different debtors, credit risk exposure is reduced. The specific credit risks
of individual counterparties are taken into account in determining the fair values of derivative financial instruments.
In addition, the counterparty risk is continually monitored and controlled using internal bank limits.
LIQUIDITY RISK
Liquidity risks consist of the Group being unable to meet its shot term financial obligations and resulting increases
in funding costs. For this reason, the key objectives of TUI ’s internal liquidity management system are to secure
the Group’s liquidity at all times and consistently comply with contractual payment obligations. Assets of € 0.3 m
(previous year € 3.1 m) were deposited as collateral for liabilities. The participating Group companies are also
jointly and severally liable for financial liabilities from cash pooling agreements.
The tables provided below list the contractually agreed (undiscounted) cash flows of all primary financial liabilities
and derivative financial instruments as at the balance sheet date. Planned payments for future new liabilities were
not taken into account. Where financial liabilities have a floating interest rate, the forward interest rates fixed at
the balance sheet date were used to determine future interest payments. Financial liabilities cancellable at any
time are allocated to the earliest maturity band.
C A S H F L O W O F F I N A N C I A L I N S T R U M E N T S – F I N A N C I A L L I A B I L I T I E S ( 3 0 S E P 2 0 15 )
€ million
Bonds
Financial liabilities due to non-
consolidated Group companies
Financial liabilities due to affiliates
Trade payables
Other liabilities
Cash outflow until 30 Sep
up to 1 year
1 – 2 years
2 – 5 years
more than 5 years
repayment
interest repayment
interest repayment
interest repayment
interest
–
– 61.0
– 68.8
– 13.5
– 4.3
– 34.4
–
– 55.6
– 68.2
– 13.5
– 3.5
– 32.2
– 300.0
– 151.7
– 212.5
– 33.8
– 8.6
– 83.6
–
– 225.8
– 632.5
–
– 7.3
– 84.4
– 5.2
– 8.0
– 90.0
– 3,224.2
– 66.2
–
–
–
–
– 12.2
–
–
– 13.4
–
– 7.5
–
–
–
–
–
–
–
–
–
– 2.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
NOTES
267
268
NOTES
C A S H F L O W O F F I N A N C I A L I N S T R U M E N T S – F I N A N C I A L L I A B I L I T I E S ( 3 0 S E P 2 0 14 ) ( R E S TAT E D )
€ million
Bonds
Financial liabilities due to non-
consolidated Group companies
Trade payables
Other liabilities
Cash outflow until 30 Sep
up to 1 year
1 – 2 years
2 – 5 years
more than 5 years
repayment
interest repayment
interest repayment
interest repayment
interest
– 28.4
– 53.0
– 46.8
– 48.9
– 1.3
– 27.2
– 338.9
– 49.1
– 39.1
– 43.4
– 1.2
– 0.8
– 514.6
– 86.1
– 97.9
– 65.7
– 3.7
– 1.9
– 300.0
– 72.5
– 316.8
– 6.8
– 5.0
– 10.6
– 5.6
– 83.6
– 3,292.1
– 225.0
–
–
–
– 12.7
–
– 1.0
–
– 17.3
–
–
–
–
–
–
–
– 2.2
–
–
–
–
–
–
–
–
–
–
–
–
C A S H F L O W O F D E R I VAT I V E F I N A N C I A L I N S T R U M E N T S ( 3 0 S E P 2 0 15 )
€ million
Hedging transactions – inflows
Hedging transactions – outflows
Other derivative financial instruments – inflows
Other derivative financial instruments – outflows
up to 1 year
1 – 2 years
+ 6,865.3
– 7,016.7
+ 4,090.9
– 3,576.0
+ 1,620.3
– 1,660.1
+ 153.1
– 150.1
Cash in- / outflow until 30 Sep
more than
5 years
2 – 5 years
+ 412.1
– 423.0
+ 23.2
– 22.4
+ 0.7
– 0.7
–
–
C A S H F L O W O F D E R I VAT I V E F I N A N C I A L I N S T R U M E N T S ( 3 0 S E P 2 0 15 R E S TAT E D )
€ million
Hedging transactions – inflows
Hedging transactions – outflows
Other derivative financial instruments – inflows
Other derivative financial instruments – outflows
up to 1 year
+ 6,149.6
– 6,196.4
+ 3,103.1
– 3,134.2
Cash in- / outflow until 30 Sep
1 – 2 years
2 – 5 years
+ 743.2
– 722.4
+ 27.3
– 27.2
+ 34.6
– 31.3
–
– 0.8
D E R I V AT I V E F I N A N C I A L I N S T R U M E N T S A N D H E D G E S
S T R AT E G Y A N D G O A L S
In accordance with the TUI Group’s implementing regulations, derivatives are allowed to be used if they are based
on underlying recognised assets or liabilities, firm commitments or forecasted transactions. Hedge accounting is
based on the rules of IAS 39, in particular in the framework of forecasted transactions. In the financial year under
review, hedges primarily consisted of cash flow hedges.
Derivative financial instruments in the form of fixed-price transactions and options as well as structured products
are used to limit currency, interest rate and fuel risks.
C ASH FLOW HEDGES
As at 30 September 2015, hedges existed to hedge cash flows in foreign currencies with maturities of up to six
years (previous year up to three years). The hedging transactions of fuel price hedges had terms of up to four
years (previous year up to four years). There were no longer any hedging transactions to hedge the floating-r ate
interest payment obligations. Interest hedges were entered into in financial years 2010 / 11 and 2012 / 13 in order
to hedge TUI AG ’s floating-rate interest payment obligations in connection with the funding to acquire a part of
the convertible bond issued by TUI Travel PLC . Due to the merger between TUI AG and TUI Travel PLC , these
interest hedges were terminated. In the prior year, interest hedges with a term of up to two years existed.
In accounting for derivatives of cash flow hedges, the effective portion of the cumulative changes in market values
is carried in the revaluation reserve outside profit and loss until the hedged item occurs. It is carried in the income
statement through profit and loss when the hedged item is executed. In the financial year under review, expenses
of € 580.8 m (previous year income of € 150.6 m) for currency hedges and derivative financial instruments used as
price hedges were carried in the cost of sales. Expenses of € 0.3 m (previous year expenses of € 0.7 m) was carried
in the financial result for interest hedges. Income of € 0.7 m (previous year income of € 0.1 m) was carried for the
ineffective portion of the cash flow hedges.
N O M I N A L A M O U N T S O F D E R I VAT I V E F I N A N C I A L I N S T R U M E N T S U S E D
30 Sep 2015
€ million
Interest rate hedges
Caps
Swaps
Currency hedges
Forwards
Options
Structured instruments
Commodity hedges
Swaps
Options
Other financial instruments
Remaining term
up to
more than
1 year
1 year
Total
30 Sep 2014
restated
Remaining term
up to
more than
1 year
1 year
Total
67.7
–
160.4
25.2
228.1
25.2
–
25.0
225.6
90.0
225.6
115.0
10,261.1
2.1
114.5
2,109.5
–
113.6
12,370.6
2.1
228.1
9,128.3
4.0
204.6
789.7
–
18.4
9,918.0
4.0
223.0
977.2
37.4
–
313.5
–
–
1,290.7
37.4
–
1,041.2
3.0
–
283.9
–
193.0
1,325.1
3.0
193.0
The nominal amounts correspond to the total of all purchase or sale amounts or the contract values of the transactions.
F A I R V A L U E S O F D E R I V AT I V E F I N A N C I A L I N S T R U M E N T S
The fair values of derivative financial instruments correspond to the market values. The market price determined for
all derivative financial instruments is the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date. A description of the determination
of the fair values of derivative financial instruments is provided in the framework of the presentation of the classifi
cation of financial instruments measured at fair value.
NOTES
269
270
NOTES
P O S I T I V E A N D N E G AT I V E FA I R VA L U E S O F D E R I VAT I V E F I N A N C I A L I N S T R U M E N T S
SHOW N A S RECE IVABLE S OR LIABILITIE S
30 Sep 2015
€ million
Receivables
Liabilities
Receivables
30 Sep 2014
restated
Liabilities
257.5
4.9
–
96.7
347.1
–
186.0
37.4
0.1
124.1
83.1
0.3
–
262.4
66.7
329.1
–
443.8
22.9
466.7
–
223.5
22.0
245.5
0.2
207.7
54.9
262.6
Cash flow hedges for
currency risks
other market price risks
interest rate risks
Fair value hedges for
currency risks
Hedging
Other derivative financial instruments
Total
Financial instruments which are entered into in order to hedge a risk position according to operational criteria but
do not meet the strict criteria of IAS 39 to qualify for hedge accounting are shown as other derivative financial
instruments. They include, in particular, foreign currency transactions entered into in order to hedge against foreign
exchange-induced exposure to changes in the value of balance sheet items and foreign exchange fluctuations
from future expenses in Tourism.
FINANCIAL INSTRUMENTS – ADDITIONAL DISCLOSURES
C A R RY I N G A M O U N T S A N D FA I R VA LU E S
Where financial instruments are listed in an active market, e. g. above all shares held and bonds issued, the fair
value or market value is the respective quotation in this market at the balance sheet date. For over-the-counter
bonds, liabilities to banks, promissory notes and other non-current financial liabilities, the fair value is determined
as the present value of future cash flows, taking account of yield curves and the respective credit spread, which
depends on the credit rating.
Due to the short remaining terms of cash and cash equivalents, current trade receivables and other assets, current
trade payables and other payables, the carrying amounts are taken as realistic estimates of the fair value.
The fair values of non-current trade receivables and other assets correspond to the present values of the cash
flows associated with the assets, taking account of current interest parameters which reflect market- and counter
party-related changes in terms and expectations. There are no financial investments held to maturity.
NOTES
271
C A R R Y I N G A M O U N T S A N D FA I R VA L U E S A C C O R D I N G T O C L A S S E S A N D M E A S U R E M E N T C AT E G O R I E S A S AT 3 0 S E P 2 0 15
Category under IA S 39
€ million
Assets
Available for sale financial assets
Hedging
Other derivative financial
instruments
Liabilities
Trade payables
Hedging
instruments
Other liabilities
Fair value with
Fair value
no effect on through profit
and loss
At cost profit and loss
Values
according
to IA S 17
(leases)
Carrying
amount of
financial
instruments
Fair value of
financial
instruments
Carrying
amount
At amortised
cost
391.1
2,281.2
–
1,064.7
50.4
–
340.7
–
–
–
–
–
391.1
1,064.7
391.1
1,064.7
262.4
–
–
262.4
–
–
262.4
262.4
66.7
1,672.7
–
1,672.7
–
–
–
–
66.7
–
–
–
66.7
1,672.7
66.7
1,672.7
1,886.4
3,224.2
904.5
3,224.0
–
–
–
–
–
–
982.0
–
904.5
3,224.0
925.1
3,224.0
443.8
–
–
443.8
–
–
443.8
443.8
22.9
3,383.5
–
152.9
–
–
–
–
22.9
–
–
–
22.9
152.9
22.9
152.9
272
NOTES
C A R R Y I N G A M O U N T S A N D F A I R V A L U E S A C C O R D I N G T O C L A S S E S A N D M E A S U R E M E N T C A T E G O R I E S A S A T 3 0 S E P 2 0 1 4 ( R E S TA T E D )
Category under IA S 39
€ million
Assets
Hedging
instruments
Liabilities
Trade payables
Hedging
instruments
Other liabilities
Fair value with
Fair value
no effect on through profit
and loss
At cost profit and loss
Values
according
to IA S 17
(leases)
Carrying
amount of
financial
instruments
Fair value of
financial
instruments
Carrying
amount
At amortised
cost
362.7
2,279.3
–
1,113.8
45.4
–
317.3
–
–
–
–
–
362.7
1,113.8
362.7
1,113.8
223.5
–
–
223.5
–
–
223.5
223.5
22.0
2,258.0
–
2,258.0
–
–
–
–
22.0
–
–
–
22.0
2,258.0
22.0
2,258.0
1,965.6
3,292.1
1,465.0
3,292.0
–
–
–
–
–
–
500.6
–
1,465.0
3,292.0
1,713.2
3,292.0
207.7
–
–
207.7
–
–
207.7
207.7
54.9
3.265.1
–
217.3
–
–
–
–
54.9
–
–
–
54.9
217.3
54.9
217.3
The financial investments classified as financial assets available for sale include an amount of € 50.4 m (previous
year € 45.4 m) for stakes in partnerships and corporations for which an active market does not exist. The fair
value of these non-listed stakes is not determined using a measurement model since the future cash flows cannot
be reliably determined. The stakes are carried at acquisition cost. In the period under review and in the previous year,
there were no major disposals of stakes in partnerships and corporations measured at acquisition cost. The TUI
Group does not intend to sell or derecognise the stakes in these partnerships and corporations in the near future.
A G G R E G AT I O N A C C O R D I N G T O M E A S U R E M E N T C AT E G O R I E S U N D E R I A S 3 9 A S AT 3 0 S E P 2 0 15
€ million
Financial assets
available for sale
held for trading
at amortised cost
held for trading
At amortised
cost
with no effect
on profit and
loss
At cost
Fair value
through
profit and
loss
Carrying
amount
Total
Fair value
2,737.4
–
–
–
2,737.4
2,737.4
–
–
50.4
–
340.7
–
–
66.7
391.1
66.7
391.1
66.7
4,281.4
–
–
–
–
–
–
22.9
4,281.4
22.9
4,302.0
22.9
A G G R E G AT I O N A C C O R D I N G T O M E A S U R E M E N T C AT E G O R I E S U N D E R I A S 3 9 A S AT 3 0 S E P 2 0 14 ( R E S TAT E D )
€ million
Financial assets
available for sale
held for trading
at amortised cost
held for trading
At amortised
cost
with no effect
on profit and
loss
At cost
Fair value
through
profit and
loss
Carrying
amount
Total
Fair value
3,371.8
–
–
–
3,371.8
3,371.8
–
–
45.4
–
317.3
–
–
22.0
362.7
22.0
362.7
22.0
4,974.3
–
–
–
–
–
–
55.4
4,974.3
55.4
5,222.5
55.4
FA I R VA LU E M E A S U R E M E N T
The table below presents the fair values of recurring, non-recurring and other financial instruments measured at
fair value in line with the underlying measurement level. The individual measurement levels have been defined as
follows in line with the inputs:
• Level 1: (unadjusted) quoted prices in active markets for identical assets or liabilities.
• Level 2: inputs for the measurement other than quoted market prices included within Level 1 that are observable in the market for the asset or liability, either directly (as quoted prices) or indirectly (derivable from quoted
prices).
• Level 3: inputs for the measurement of the asset or liability not based on observable market data.
NOTES
273
274
NOTES
C L A S S I F I C AT I O N O F FA I R VA L U E M E A S U R E M E N T O F F I N A N C I A L I N S T R U M E N T S A S O F 3 0 S E P 2 0 15
€ million
Assets
Hedging transactions
Liabilities
At amortised cost
Fair value hierarchy
Level 2
Level 3
Total
Level 1
340.7
–
–
340.7
262.4
66.7
–
–
262.4
66.7
–
–
443.8
22.9
–
–
443.8
22.9
–
–
925.1
314.4
610.7
–
C L A S S I F I C AT I O N O F FA I R VA L U E M E A S U R E M E N T O F F I N A N C I A L I N S T R U M E N T S A S O F 3 0 S E P 2 0 14 ( R E S TAT E D )
€ million
Assets
Other assets held for trading
Liabilities
At amortised cost
Fair value hierarchy
Level 2
Level 3
Total
Level 1
–
317.3
–
11.8
–
300.0
–
5.5
223.5
22.0
–
–
223.5
22.0
–
–
207.7
54.9
–
–
207.7
54.9
–
–
1,713.2
1,362.3
350.9
–
At the end of every reporting period, TUI Group examines whether there are any reasons to reclassify assets from or
to a different level. Financial assets and financial liabilities are always reclassified from Level 1 to Level 2 if liquidity
and trading activities no longer indicate an active market. This also applies, vice versa, to potential reclassifications
from Level 2 to Level 1. In the period under review, no reclassifications were made between Level 1 and Level 2.
There were also no reclassifications from or to Level 3. Reclassifications from Level 3 to Level 2 or Level 1 are
made if observable quoted prices become available for the asset or liability concerned. TUI Group records reclassifications to and from Level 3 as per the day on which an event or trigger causes the reclassification.
LEVEL 1 FINANCIAL INSTRUMENTS:
The fair value of financial instruments for which an active market exists is based on quoted prices at the reporting
date. An active market exists if quoted prices are readily and regularly available from an exchange, dealer, broker,
pricing service or regulatory agency and these prices represent actual and regularly occurring market transactions
on an arm’s length basis. These financial instruments are classified as Level 1. The fair values correspond to the
nominal amounts multiplied by the quoted prices at the reporting date. Level 1 financial instruments primarily
comprise shares in listed companies classified as available for sale and bonds issued classified as financial liabilities
at amortised cost.
The fair values of financial instruments not traded in an active market, e. g. over-the-counter (OTC ) derivatives,
are determined by means of valuation techniques. These valuation techniques make maximum use of observable
market data and minimise the use of Group-specific assumptions. If all essential inputs for the determination of
the fair value of an instrument are observable, the instrument is classified as Level 2.
If one or several key inputs are not based on observable market data, the instrument is classified as Level 3.
The following specific valuation techniques are used to measure financial instruments:
• For over-the-counter bonds, liabilities to banks, promissory notes and other non-current financial liabilities, the fair
value is determined as the present value of future cash flows, taking account of yield curves and the respective
credit spread, which depends on the credit rating.
• The fair value of over-the-counter derivatives is determined by means of appropriate calculation methods, e. g.
by discounting the expected future cash flows. The forward prices of forward transactions are based on the spot
or cash prices, taking account of forward premiums and discounts. The calculation of the fair values of options
concluded for currency options is based on the Black & Scholes model and the Turnbull & Wakeman model for
optional fuel hedges. The fair values determined on the basis of the Group’s own systems are periodically
compared with fair value confirmations of the external counterparties.
• Other valuation techniques, e. g. discounting future cash flows, are used to determine the fair values of other
financial instruments.
• The fair value of non-listed money market funds is determined by means of observable price quotations (net
asset value).
NOTES
275
276
NOTES
The table below presents the fair values of the financial instruments measured at fair value on a recurring basis,
classified as Level 3:
F I N A N C I A L A S S E T S M E A S U R E D AT FA I R VA L U E I N L E V E L 3
Other assets held
for trading
Available for sale
financial assets
Balance as at 1 October 2013
Additions (incl. Transfers)
Disposals
repayment / sale
conversion
Total gains or losses for the period
included in profit or loss
included in other comprehensive income
Change in unrealised gains or losses for the period for fi
nancial assets held at the
balance sheet date
40.6
–
–
5.2
35.5
5.2
0.1
–
0.1
–
–
–
0.3
–
0.3
5.5
–
–
Balance as at 1 October 2014
Additions (incl. Transfers)
Total gains or losses for the period
included in profit or loss
included in other comprehensive income
Change in unrealised gains or losses for the period for fi
nancial assets held at the
balance sheet date
–
–
–
–
–
–
5.5
481.9
– 146.7
– 147.1
0.4
340.7
–
– 147.1
€ million
The changes in Level 3 financial instruments result from the addition of the stake in Hapag-Lloyd AG , which has
been accounted for as an available for sale financial asset since December 2014.
As the recurring fair value measurements of the investment in Hapag-Lloyd AG are using significant non-observable
inputs, these are categorised within Level 3 of the fair value hierarchy.
The loss on level 3 financial instruments contains the impairment of the investment in Hapag-Lloyd AG of € 147.1 m.
We refer to the section “available for sale financial assets“ in Note 19.
NOTES
277
MEASUREMENT PROCESS
Determination of the fair value of Level 3 financial instruments is based on discounted cash flow techniques by
the TUI Group’s finance department. The market data and parameters required for the quarterly valuation are
collected and validated. Unobservable inputs are checked and updated, if necessary, on the basis of the internally
available information.
The valuation results are compared with those of independent market participants, e. g. analyst studies, provided
by Investor Relations. If the fair value determined on the basis of the given valuation technique falls outside of the
bandwidth of external valuations, the valuation model is reviewed by Finance and verified by means of alternative
assumptions, which might be considered by other market participants based on sound judgement in the price
verification process at the end of the corresponding quarter. The CFO is informed about the result of the valuation
of the key Level 3 financial instruments.
MEASUREMENT OF LEVEL 3 FINANCIAL INSTRUMENTS
The table below provides information about the valuation methods and the key unobservable inputs used to
determine the fair values.
FAIR VALUE ME A SURE ME NT S USING SIGNIFIC ANT UNOBSE RVABLE INPUT S (LE VE L 3)
Financial asset
Investment Hapag-Lloyd AG
Investment NATS
Fair Value
in € million
Valuation technique
Unobservable input
Range
334.9
Discounted Cash Flow
(estimated) EBITDA -Margin
7 %– 9 %
WACC
6.0 %
Terminal Growth Rate
(n. a.)
0.5 %
(n. a.)
5.8
Prior transactions
Inter-relationship between unobservable
input and fair value measurement
The higher the (estimated) EBITDA -margin,
the higher the fair value
The lower the weighted average cost of capital,
The higher the terminal growth rate,
(n. a.)
The forecasted EBITDA -margin is based on assumptions about the future development of freight volumes,
freight rates as well as the USD / EUR exchange rate and the oil price. To ensure the market proximity of the
measurement inputs, the plausibility of used EBITDA -margins was tested based on observable EBITDA multiples
of listed peers at the balance sheet date. Possible future deviations to these assumptions may result from the development of the macroeconomic situation and the ongoing hard competition within the container shipping industry.
278
NOTES
S E N S I T I V I T Y A N A LY S I S
The fair value of the stake in Hapag-Lloyd AG would change significantly if one or several of the key unobservable
inputs were replaced by alternative assumptions assessed as possible. The table below presents the sensitivities
to changes in the key unobservable inputs.
E FFEC T OF CHANGE S TO NON - OBSE RVABLE INPUT S ON THE FAIR VALUE ME A SURE ME NT
€ million
(Forecasted) EBITDA -margin
WACC
Terminal Growth Rate
Increase / (decrease) in
non-observable inputs
Favourable / (unfavourable)
impact on profit or loss
0.25 %
– 0.25 %
0.25 %
– 0.25 %
0.25 %
– 0.25 %
71.5
– 71.4
– 43.0
47.2
40.4
– 36.8
The positive and negatives changes presented have been calculated separately.
A change of + 10 / – 10 % in the determined value of the stake in NATS results in a € 0.4 m increase / € – 0.4 m decrease
in the value recognised for the asset in the TUI Group, carried outside profit and loss and affecting earnings after
tax (as at 30 September 2014 € + 0.4 m / € – 0.4 m, carried outside profit or loss). Changes in unobservable parameters
do not have a material effect on the result.
E F F E C T S O N R E S U LT S
The effects of the measurement of financial assets available for sale outside profit and loss and the effective
portions of changes in fair values of derivatives designated in the framework of cash flow hedge accounting are
listed in the statement of changes in equity.
NOTES
279
The net results of the financial instruments by measurement category according to IAS 39 are as follows:
N E T R E S U LT S O F F I N A N C I A L I N S T R U M E N T S
2014 / 15
from
interest
€ million
Financial assets and liabilities held for trading
Financial liabilities at amortised cost
Total
– 13.0
–
– 142.0
– 49.5
– 204.5
other net
results net result
80.1
– 141.3
98.6
– 82.6
– 45.2
67.1
– 141.3
– 43.4
– 132.1
– 249.7
2013 / 14
restated
from
interest
other net
results
net result
8.0
1.9
10.9
– 101.5
– 80.7
54.0
2.1
– 2.0
– 135.3
– 81.2
62.0
4.0
8.9
– 236.8
– 161.9
Other net result of available for sale financial assets comprises the impairment of the stake in Hapag-Lloyd AG of
€ 147.1 m. Besides the net results primarily include results from participations, gains and losses on disposal, effects
of fair value measurements and impairments, as well as interest income and interest expenses.
Financial instruments measured at fair value outside profit and loss did not give rise to any commission expenses
in financial year 2014 / 15, just as in the previous year.
NETTING
The following financial assets and liabilities are subject to contractual netting arrangements:
OFFSETTING – FINANCIAL ASSETS
Related amounts not set off
in the balance sheet
€ million
Financial assets as at 30 Sep 2015
Derivative financial assets
Financial assets as at 30 Sep 2014
(restated)
Derivative financial assets
Gross Amounts
of financial
assets
Gross amounts of
recognised financial
liabilities set off
Net amounts of financial
assets presented in the
balance sheet
Financial
Instruments
Cash Collateral
received
Net
Amount
329.1
5,556.2
–
3,883.6
329.1
1,672.6
56.5
–
–
–
272.6
1,672.6
245.5
5,835.7
–
3,577.8
245.5
2,258.0
208.4
–
–
–
37.1
2,258.0
280
NOTES
OFFSETTING – FINANCIAL LIABILITIES
Related amounts not set off
in the balance sheet
€ million
Financial liabilities as at 30 Sep 2015
Financial liabilities as at 30 Sep 2014
(restated)
Gross Amounts
of financial
liabilities
Gross amounts of
recognised financial
assets set off
Net amounts of financial
liabilities presented in the
balance sheet
Financial
Instruments
Cash Collateral
granted
Net
Amount
466.7
5,770.0
–
3,883.6
466.7
1,886.4
56.5
–
–
–
410.2
1,886.4
262.6
5,543.3
–
3,577.8
262.6
1,965.6
208.4
–
–
–
54.2
1,965.6
Financial assets and financial liabilities are only netted in the balance sheet if a legally enforceable right to netting
exists and the Company intends to settle on a net basis.
The contracts for financial instruments are based on standardised master agreements for financial derivatives
(including ISDA Master Agreement, German master agreement for financial derivatives), creating a conditional
right to netting contingent on defined future events. Under the contractual agreements all derivatives contracted
with the corresponding counterparty with positive or negative fair values are netted in that case, resulting in a net
receivable or payable in the amount of the balance. As this conditional right to netting is not enforceable in the
course of ordinary business transactions, the derivative financial assets and liabilities are carried at their gross
amounts in the balance sheet date at the reporting date.
Financial assets and liabilities in the framework of the cash pooling scheme are shown on a net basis if there is a
right to netting in ordinary business transactions and the Group intends to settle on a net basis.
(45) Capital risk management
One of the key performance indicators in the framework of capital risk management is the IFRS -based gearing,
i.e. the relationship between the Group’s net debt and Group equity. From a risk perspective, a balanced relation
between net debt and equity is to be sought. In terms of risk aspects, the TUI Group strives for an appropriate
ratio between net debt and equity.
In order to exert active control over the capital structure, the TUI Group’s management may change dividend
payments to the shareholders, repay capital to the shareholders, issue new shares or issue hybrid capital. The
management may also sell assets in order to reduce Group debt.
G E A R I N G C A L C U L AT I O N
2014 / 15
2013 / 14
restated
2,308.5
1,346.7
961.8
1,976.0
48.7
2,803.5
2,013.2
790.3
1,774.2
44.5
€ million
Average financial debt
Average cash and cash equivalent
Average Group net debt
Average Group equity
Gearing
%
NOTES
281
282
NOTES
Notes on the Cash Flow Statement
The cash flow statement shows the flow of cash and cash equivalents on the basis of a separate presentation of
cash inflows and outflows from operating, investing and financing activities. The effects of changes in the group
of consolidated companies are eliminated. The cash flows are shown for the continuing operations and the discontinued operation.
In the period under review, cash and cash equivalents declined by € 575.8 m to € 1,682.2 m, including an amount
of € 9.5 m carried as assets held for sale.
(46) Cash inflow / outflow from operating activities
Based on the Group result after tax, the cash flow from operating activities is derived using the indirect method.
The cash inflow from operating activities amounted to € 790.5 m (previous year € 1,074.5 m) in the period under
review.
In the period under review, the cash inflow included interest of € 18.6 m and dividends of € 84.3 m. A cash outflow
of € 148.4 m resulted from income tax payments.
(47) Cash inflow / outflow from investing activities
In financial year 2014 / 15, the cash outflow from investing activities amounted to € 216.8 m (previous year
€ 586.3 m).
The cash flow from investing activities includes a cash inflow of € 341.6 m from the sale of property, plant and
equipment, primarily aircraft assets and a hotel in Gran Canaria.
The Group recorded a cash inflow of € 2.3 m from the sale of consolidated companies. On the other hand, it also
recorded a cash outflow of € 29.9 m for the divestment of the PE AK Adventure Travel Group.
The cash inflow from the disposal of other non-current assets comprises an amount of € 300.0 m from the sale of
stakes in a money market fund acquired in the prior year and sold after the completion of the merger with
TUI Travel PLC . A cash inflow of € 17.9 m was generated from the sale of joint ventures.
Cash outflows include an amount of € 462.1 m for investments in property, plant and equipment and intangible
assets of tour operators and airlines, € 173.3 m for Hotels & Resorts, € 88.5 m for Cruises and € 85.3 m for Specialist Travel companies. The cash outflow for investments in property, plant and equipment and intangible assets
and the cash inflow from corresponding divestments do not match the additions and disposals shown in the development of fixed assets, which also include non-cash investments and disposals.
In financial year 2014 / 15, a cash outflow of € 5.5 m resulted from acquisitions of companies to be included in
consolidation. This amount includes payments of € 1.7 m for acquisitions made in prior years. Cash and cash
equivalents acquired through the acquisitions total € 0.4 m so that the total outflow of cash amounted to € 5.1 m.
The cash outflow for other assets includes an amount of € 23.8 m for the acquisition and for capital increases in
joint ventures.
(48) Cash inflow / outflow from financing activities
The cash outflow from financing activities totalled € 1,116.7 m (previous year € 318.8 m).
In the framework of the merger between TUI AG and TUI Travel PLC , the capital increase required resulted in a
cash outflow of € 10.9 m while other measures caused an outflow of € 38.8 m. TUI Travel PLC acquired own shares
worth € 85.1 m in order to use them for share option plans. An outflow of € 4.3 m resulted from the increase in
shares in consolidated companies.
TUI AG has replaced the credit line previously held by TUI Travel PLC with corresponding new credit facilities. The
amounts drawn from that facility in the period under review have meanwhile been fully repaid. TUI AG used an
amount of € 195.3 m to repay a financing scheme in connection with a convertible bond issued by TUI Travel PLC .
In this context, reference is made to the section on “Merger between TUI AG and TUI Travel PLC ”. A cash outflow
of € 2.4 m relates to the non-converted part of TUI AG ’s convertible bond which matured in November 2014,
originally amounting to € 217.8 m, and the non-converted part of TUI AG ’s convertible bond originally worth
€ 339.0 m which was called early in the period under review. A cash outflow of € 300.0 m resulted from the redemption of TUI AG ’s perpetual subordinated bond.
The segment Hotels & Resorts has taken out financial liabilities worth € 7.4 m and redeemed € 76.8 m. A loan of
€ 76.7 m was used to finance a plane. Finance lease liabilities worth € 57.0 m were repaid.
Further cash outflows relate to the dividends for the hybrid holders and TUI AG shareholders (€ 109.3 m) and the
dividends for the minority shareholders, primarily of TUI Travel PLC and RIUSA II S.A. (€ 197.0 m). A cash outflow
of € 92.0 m resulted from interest payments.
(49) Development of cash and cash equivalents
Cash and cash equivalents comprise all liquid funds, i.e. cash in hand, bank balances and cheques.
As certain amounts from a cash pool agreement have been included in cash management since the prior year, a
reconciliation is shown from cash and cash equivalents in the prior year’s cash flow statement to cash and cash
equivalents as presented in the statement of financial position. The effect of € 587.5 m is carried as a non-cash
change in cash and cash equivalents.
Cash and cash equivalents also declined by € 33.1 m due to foreign exchange effects.
As at 30 September 2015, cash and cash equivalents of € 198.5 m were subject to restrictions on disposal. This
amount includes € 116.3 m for cash collateral received, which was deposited in a Belgian subsidiary by Belgian tax
authorities in the period under review in the framework of long-standing litigation over VAT refunds for the period from 2001 to 2011 without admission of guilt, the purpose being to suspend the accrual of interest for both
parties. In order to collateralise a potential repayment, the Belgian government was granted a bank guarantee.
Due to the bank guarantee, TUI ’s ability to dispose of the cash and cash equivalents has been restricted. The
remaining restrictions on disposal relate to cash and cash equivalents to be deposited due to legal or regulatory
requirements.
NOTES
283
284
NOTES
Other Notes
Other Notes
(50) Significant transactions after the balance sheet date
On 6 October 2015, TUI entered a contract for the sale of LateRooms Ltd. for a consideration of £ 8.5 m (€ 11.6 m).
The completion of the sale took place on 6 October 2015. The transaction does not require regulatory approval.
The LateRooms segment was presented as a discontinued operation as at 30 September 2015.
On 23 October 2015, TUI and Oscrivia Limited entered contractual agreements to reorganise the equity of Togebi
Holdings Limited. In particular, a cash capital increase of USD 20 m was agreed, in which TUI participates with a
USD 3 m contribution. Following the completion of the agreements, TUI Group’s stake in Togebi Holdings Limited,
within the segment northern region, reduces from 49 % to 25 %. At the same time Oscrivia Limited increases its
stake from 51 % to 75 %. Furthermore the joint venture agreement closed in 2009 was amended to reflect the new
voting rights proportions. Due to these amendments, the relevant activities of Togebi Holdings Limited continue
to be jointly determined by TUI and Oscrivia Limited, so that Togebi Holdings Limited remains to be classified as
a joint venture.
On 6 November 2015 the initial public offering of Hapag-Lloyd AG occurred. Hapag-Lloyd’s gross issuing proceeds
through the placing of 13,228,677 new shares at an issue price of € 20.00 per HL AG share amounted to approximately € 265.0 m. Since then, the shares of Hapag-Lloyd AG are traded in the regulated market (prime standard)
of the Frankfurt stock exchange. Due to this capital increase TUI ’s stake in Hapag-Lloyd AG ’s capital has reduced
from 13.9 % to 12.3 %. If the investment had been measured at the issue price of € 20.00 per share at the balance
sheet date, contrary to the requirements of IFRS 13, an additional impairment of € 43.7 m would have arised. For
fair value measurements of the investment at future measurement dates the quoted price of the Hapag-Lloyd
share is relevant as a level 1 input.
(51) Services of the auditors of the consolidated financial statements
Total expenses for the services provided by the auditors of the consolidated financial statements in financial year
2014 / 15, PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, can be broken down as
follows:
S E R V I C E S O F T H E A U D I T O R S O F T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
€ million
Audit fees for TUI AG and subsidiaries in Germany
Audit fees
Review of interim financial statements
Services related to capital increases / decreases
Other assurance services
Other certification and measurement services
Consulting fees
Tax advisor services
Other services
Total
2014 / 15
2013 / 14
2.9
2.9
1.0
–
0.3
1.3
2.3
0.1
2.4
6.6
4.0
4.0
0.7
1.2
0.4
2.3
1.1
0.1
1.2
7.5
Other Notes
(52) Remuneration of Executive and Supervisory Board members
Total remuneration for Supervisory Board members in the period under review amounted to € 2,829.0 thousand
(previous year € 2,024.5 thousand).
Remuneration for former Executive Board members or their surviving dependants totalled € 4,891.1 thousand
(previous year € 4,455.8 thousand) in financial year 2014 / 15. Pension obligations for former Executive Board
members and their surviving dependants amounted to € 79,754.3 thousand (previous year € 69,626.6 thousand)
as at the balance sheet date.
All the disclosures for active executive board members as well as the individual amounts and further details on
the remuneration system are provided in the Remuneration Report included in the Management Report.
(53) E xemption from disclosure and preparation of a management report in
accordance with section 264 (3) of the German Commercial Code (HGB )
The following German subsidiaries fully included in consolidation have met the condition required under section
264 (3) of the German Commercial Code and were therefore exempted from the requirement to disclose their
annual financial statements and prepare a management report:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Berge & Meer Touristik GmbH, Rengsdorf
DEFAG Beteiligungsverwaltungs GmbH I, Hanover
DEFAG Beteiligungsverwaltungs GmbH III , Hanover
FOX -TOURS Reisen GmbH, Rengsdorf
Germanair Flugzeug Leasing GmbH, Hamburg
Hapag-Lloyd Executive GmbH, Langenhagen
Hapag-Lloyd Kreuzfahrten GmbH, Hamburg
Last-Minute-Restplatzreisen GmbH, Baden-Baden
L’tur tourismus Aktiengesellschaft, Baden-Baden
Master-Yachting GmbH, Eibelstadt
MEDICO Flugreisen GmbH, Baden-Baden
MicronNexus GmbH, Hamburg
OF T REISEN GmbH, Rengsdorf
Preussag Beteiligungsverwaltungs GmbH IX , Hanover
Preussag Immobilien GmbH, Salzgitter
ProTel Gesellschaft für Kommunikation mbH, Rengsdorf
Robinson Club GmbH, Hanover
TC V Touristik-Computerverwaltungs GmbH, Baden-Baden
TICS GmbH Touristische Internet und Call Center Services, Baden-Baden
TUI 4 U GmbH, Bremen
TUI aqtiv GmbH, Hanover
TUI Aviation GmbH, Hanover
TUI Beteiligungs GmbH, Hanover
TUI Business Services GmbH, Hanover
TUI Connect GmbH, Hanover
TUI Group Services GmbH, Hanover
TUI -Hapag Beteiligungs GmbH, Hanover
TUI Hotel Betriebsgesellschaft mbH, Hanover
TUI InfoTec GmbH, Hanover
TUI Leisure Travel Service GmbH, Neuss
TUI Leisure Travel Spezial Tours GmbH, Hanover
TUI .com GmbH, Berlin
TUI fly Vermarktungs GmbH, Hanover
Wolters Reisen GmbH, Stuhr
NOTES
285
286
NOTES
Other Notes
The German subsidiary Leibniz-Service GmbH, Hanover, fully included in consolidation has met the condition
required under section 264 (3) of the German Commercial Code and was therefore exempted from the requirement to disclose its annual financial statements.
(54) Related parties
Apart from the subsidiaries included in the consolidated financial statements, TUI AG , in carrying out its ordinary
business activities, maintains indirect or direct relationships with related parties. Related parties controlled by the
TUI Group or over which the TUI Group is able to exercise a significant influence are listed in the list of shareholdings published in the electronic Federal Gazette (www.ebanz.de). Apart from pure equity investments, related
parties also include companies that supply goods or provide services for TUI Group companies.
In respect of related parties, financial obligations from order commitments mainly relate to purchases of hotel
services. The TUI Group also has obligations from order commitments of € 877.2 m (previous year € Nil) to related party TUI Cruises. These obligations are related to finance lease contracts for cruise ships, closed in financial
year 2014 / 15.
In addition, there are obligations of € 15.1 m (previous year € 22.4 m) from rental and lease agreements.
T R A N S A C T I O N S W I T H R E L AT E D PA R T I E S
2014 / 15
2013 / 14
restated
82.4
58.8
7.5
148.7
65.8
51.9
–
117.7
31.7
236.9
9.2
0.2
51.2
329.2
29.9
338.9
8.6
–
37.8
415.2
€ million
Services provided by the Group
Management and consultancy services
Sales of tourism services
Other services
Total
Services received by the Group
In the framework of lease, rental aund leasing agreements
Purchase of hotel services
Incoming services
Distribution services
Other services
Total
Other Notes
T R A N S A C T I O N S W I T H R E L A T E D P A R T I E S 2014 / 15
2013 / 14
restated
3.2
61.6
39.0
44.9
148.7
2.3
49.5
30.5
35.4
117.7
5.8
230.5
81.1
11.8
329.2
11.0
320.5
73.2
10.5
415.2
€ million
Services provided by the Group to
non-consolidated Group companies
joint ventures
associates
other related parties
Total
Services received by the Group from
joint ventures
associates
Total
Transactions with joint ventures and associates are recognised in the tourism business. They relate to, in particular,
the tourism services of the hotel companies used by the Group’s tour operators.
All transactions with related parties are executed on an arm’s length basis, based on international comparable
uncontrolled price methods in accordance with IAS 24.
R E C E I V A B L E S A G A I N S T R E L A T E D P A R T I E S 30 Sep 2015
30 Sep 2014
restated
1.5
20.6
5.6
27.7
2.6
27.9
10.5
41.0
17.4
34.0
7.6
59.0
16.4
33.6
11.9
61.9
11.7
11.7
25.9
25.9
1.7
10.7
7.3
19.7
1.9
51.1
3.8
56.8
€ million
Trade receivables from
joint ventures
associates
Total
Advances and loans to
joint ventures
associates
Total
Payments on account to
joint ventures
Total
Other receivables from
joint ventures
associates
Total
NOTES
287
288
NOTES
Other Notes
PAYA B L E S D U E T O R E L AT E D PA R T I E S
30 Sep 2015
30 Sep 2014
restated
5.8
32.3
4.9
43.0
6.0
49.6
12.1
67.7
5.2
8.0
13.2
5.6
–
5.6
3.6
28.8
8.3
4.2
44.9
5.0
33.0
5.3
0.3
43.6
€ million
Trade payables due to
joint ventures
associates
Total
Financial liabilities due to
joint ventures
Total
Other liabilities due to
joint ventures
associates
Total
Liabilities to related parties did not comprise any liabilities from finance leases, as in the prior year.
The share of results of associates and joint ventures is shown separately per segment in segment reporting.
The joint venture Riu Hotels S.A. held less than 5 % of the shares in TUI AG at the balance sheet date. The number
of shares was identical with the prior year; the percentage reduction only constitutes a dilution effect caused by
the merger between TUI AG and TUI Travel PLC . Luis Riu Güell and Carmen Riu Güell (member of the Supervisory
Board of TUI AG ) hold a stake of 51 % in Riu Hotels S.A.
In accordance with IAS 24, key management functions within the Group, the Executive Board and the Supervisory
Board are related parties whose remuneration has to be listed separately.
R E M U N E R AT I O N O F M A N A G E M E N T, E X E C U T I V E A N D S U P E R V I S O R Y B O A R D
Mio. €
Short-term benefits
Post-employment benefits
Other long-term benefits (share-based payments)
Termination benefits
Total
2014 / 15
2013 / 14
13.8
3.9
8.3
2.3
28.3
20.0
0.7
6.9
–
27.6
Other Notes
Post-employment benefits are transfers to or reversals of pension provisions for active Executive Board members
in the period under review. These expenses do not meet the definition of Executive and Supervisory Board remuneration under the German accounting rules.
Pension provisions for active Executive Board members total € 10.7 m (previous year € 6.9 m) as at the balance
sheet date.
In addition, provisions amounting to € 5.4 m (previous year € 2.6 m) are recognised relating to the long-term incentive
programme.
(55) International Financial Reporting Standards (IFRS ) and Interpretations (IFRIC )
The following standards have already been transposed into EU legislation, but are only mandatory for annual financial statements after 30 September 2015:
A M E N D M E N T S T O I A S 1 6 : P R O P E R T Y, P L A N T A N D E Q U I P M E N T A N D I A S 41 : A G R I C U LT U R E
Bearer plants that bear biological assets for more than one period without serving as an agricultural produce
themselves, such as grape vines or olive trees, have this far been measured at fair value. The amendments, issued
in June 2014, clarify that bearer plants will be treated as property, plant and equipment in the scope of IAS 16 in
future and are to be measured at amortised cost. By contrast, the produce growing on the bearer plant will continue to be measured at fair value in accordance with IAS 41. The amendments will not have an impact on TUI ’s
A M E N D M E N T S T O I F R S 11 : J O I N T A R R A N G E M E N T S
The provisions, issued in May 2014, specify how to account for the acquisition of an interest in a joint operation
that constitutes a business operation within the meaning of IFRS 3. Accordingly, the acquirer has to measure
identifiable assets and liabilities at fair value, recognise acquisition-related costs as expenses, recognise deferred
tax assets and liabilities and capitalise any residual amounts as goodwill. The acquirer also has to observe the
disclosure requirements of IFRS 3. The amendments apply prospectively. They are not expected to have a material
impact on TUI ’s financial statements.
A M E N D M E N T S T O I A S 1 6 : P R O P E R T Y, P L A N T A N D E Q U I P M E N T A N D I A S 3 8 : I N TA N G I B L E A S S E T S
The amendments, issued in May 2014, clarify the conditions under which the use of revenue-based methods to
calculate the depreciation of property, plant and equipment or amortisation of intangible assets is acceptable. The
amendments are of no relevance to TUI as revenue-based depreciation and amortisation methods are not used.
Amendments, standards and interpretations published by the IASB but not yet transposed into EU legislation:
A M E N D M E N T S T O I A S 1 : P R E S E N TAT I O N O F F I N A N C I A L S TAT E M E N T S
The amendments, issued in December 2014 in the framework of the Disclosure Initiative, clarify that materiality
considerations apply to the presentation of all parts of the financial statements. The standard no longer shows
the way to order the notes so that the order of the notes may reflect the individual relevance for the company.
The amendments clarify that immaterial notes are not required. This also applies if disclosure of such notes is
explicitly demanded in other standards. The presentation of an entity’s share of other comprehensive income of
equity-accounted associates and joint ventures in the statement of comprehensive income is clarified. The TUI
Group is investigating the impact of the amendments of the presentation of financial statements.
NOTES
289
290
NOTES
Other Notes
A M E N D M E N T S T O I A S 2 7 : S E PA R AT E F I N A N C I A L S TAT E M E N T S – E Q U I T Y M E T H O D I N S E PA R AT E F I N A N C I A L
S TAT E M E N T S
The amendments, published in August 2014, allow using the equity method in accounting for investments in subsidiaries, jointly controlled entities and associates in separate financial statements. The option to measure such
investments in accordance with IAS 39 or at cost is retained. The amendments are of no relevance to TUI as TUI
does not prepare IFRS -based single-entity financial statements according to section 325 (2a) of the German
Commercial Code.
A M E N D M E N T S T O I A S 2 8 : I N V E S T M E N T S I N A S S O C I AT E S A N D J O I N T V E N T U R E S A N D I F R S 1 0 :
The amendments, published in September 2014 clarify how the sale or contribution of assets between an investor
and its associate or joint venture has to be recognised. The amendments had originally been planned to be effective
for annual periods beginning on or after 1 January 2016. In the spring of 2015, the IASB took the preliminary
decision to postpone this effective date so as to coordinate it with the effective date of other planned amendments
to IAS 28. Transposition into EU legislation has therefore been temporarily suspended. It is not possible to assess
the impact on the TUI Group’s net assets, financial position and results of operations as the amendments will
apply prospectively to future transactions.
A M E N D M E N T S T O I A S 2 8 : I N V E S T M E N T S I N A S S O C I AT E S A N D J O I N T V E N T U R E S , I F R S 1 0 : C O N S O L I D AT E D
F I N A N C I A L S TAT E M E N T S , A N D I F R S 12 : D I S C L O S U R E O F I N T E R E S T S I N O T H E R E N T I T I E S
The amendments, issued by the IASB in December 2014 under the title “Investment Entities: Applying the
Consolidation Exception”, clarify which subsidiaries of investment entities have to be consolidated and which
subsidiaries have to be carried at fair value. The amendments apply prospectively and are effective from 1 January 2016. They are not relevant to the TUI Group.
A N N U A L I M P R O V E M E N T S P R O J E C T 2 0 12 – 2 0 14
Improvements from the Annual Improvements Project were published in September 2014. They contain amendments
to four standards: IAS 19, IAS 34, IFRS 5, and IFRS 7. The provisions include to minor changes to the contents
and, above all clarifications of the presentation, recognition and measurement. TUI does not expect the first-time
application of the amendments to have a material impact on its consolidated financial statements.
IFRS 9: FINANCIAL INSTRUMENTS
Publication of the fourth and final version of this new standard in July 2014 marks the completion of the project
for the accounting for financial instruments, launched by the International Accounting Standards Board in 2008 in
response to the financial crisis. The new standard supersedes the provisions for the classification and measurement
of financial assets previously included in IAS 39 “Financial Instruments: Recognition and Measurement” and comprises new rules on hedge accounting. The provisions to determine impairments are replaced by the “expected loss
model”. The standard will be effective for annual periods beginning on or after 1 January 2018 as announced by
the IASB . TUI is investigating the potential impact of the first-time application of the standard on the Group’s net
assets, financial position and results of operations.
I F R S 15 : R E V E N U E F R O M C O N T R A C T S W I T H C U S T O M E R S
The standard, issued in May 2014, creates convergence of the provisions on revenue recognition comprised in
various standards and interpretations this far. It also establishes a single, comprehensive framework for revenue
recognition, to be applied consistently across transactions and industries, specifying the amount and point in time
or period over which revenue has to be recognised. IFRS 15 replaces IAS 18 “Revenue” and IAS 11 “Construction
Contracts” as well as Interpretations IFRIC 13 “Customer Loyalty Programmes”, IFRIC 15 “Agreements for the
Construction of Real Estate”, IFRIC 18 “Transfers of Assets from Customers” and SIC 31 “Revenue – Barter Transactions Involving Advertising Services”. The amendments will take effect from 1 January 2018. TUI is investigating
the impact of this standard on its net assets, financial position and results of operations.
A decision about endorsement of these amendments or these new standards by the EU is currently still pending.
Other Notes
(56) TUI Group Shareholdings
Disclosure of the TUI Group’s shareholdings ist required under section 313 of the German Commercial Trading
Act. Comparative information for the prior-year reference period is therefore not provided.
COMPA N Y
Consolidated companies
Tourism
“ MAGIC LIFE ” Assets AG , Vienna
Abbey International Insurance PCC Limited, Luqa
Absolut Holding Limited, Luqa
Adehy Limited, Dublin
American Holidays ( NI ) Limited, Crawley
AMP Management Ltd., Crawley
aQi Hotel Schladming GmbH, Bad Erlach
atraveo GmbH, Düsseldorf
B.D.S Destination Services Tours, Cairo
Berge & Meer Touristik GmbH, Rengsdorf
Blue Scandinavia Holding AB , Stockholm
Boomerang-Reisen GmbH, Trier
Boomerang-Reisen Vermögensverwaltungs GmbH, Trier
Britannia Sweden AB , Stockholm
BU RIUSA II EOOD , Sofia
Cabotel-Hoteleria e Turismo Lda., Santiago, Cape Verde
Callers-Pegasus Pension Trustee Ltd., Crawley
Carlson Anse Marcel Riusa II SNC , Paris
Club Hôtel Management Tunisia, SARL , Djerba
Clubhotel Management AE , Athens
Corsair S.A., Rungis
Crystal Holidays Ltd., Crawley
Crystal International Travel Group Ltd., Crawley
Daidalos Hotel- und Touristikunternehmen A.E., Athens
Dominicanotel S.A., Puerto Plata
Egyptian Germany Co. for Hotels (L.T.D), Cairo
Elena SL , Palma de Mallorca
Entreprises Hotelières et Touristiques PAL ADIEN Lena Mary S.A.,
Argolis
Europa 2 Ltd, Valletta
Explorers Travel Club Limited, Crawley
Falcon Leisure Group (Overseas) Limited, Crawley
First Choice (Turkey) Limited, Crawley
First Choice Airways Limited, Crawley
First Choice Holiday Hypermarkets Limited, Crawley
First Choice Holidays & Flights Limited, Crawley
First Choice Land (Ireland) Limited, Dublin
First Choice Travel Shops (SW ) Limited, Crawley
First Choice Travel Shops Limited, Crawley
Follow Coordinate Hotels Portugal Unipessoal Lda, Albufeira Freguesia
FOX -TOURS Reisen GmbH, Rengsdorf
Fritidsresor AB , Stockholm
Fritidsresor Holding Spain S.A.U., San Bartolomé de Tirajana
Fritidsresor Ltd., Crawley
Fritidsresor Tours & Travels India Pvt Ltd, Bardez, Goa
COUNTRY
C A P I TA L S H A R E I N %
Austria
Malta
Malta
Ireland
United Kingdom
United Kingdom
Austria
Germany
Egypt
Germany
Sweden
Germany
Germany
Sweden
Bulgaria
Cape Verde
United Kingdom
France
Tunisia
Greece
France
United Kingdom
United Kingdom
Greece
Dominican Republic
Egypt
Spain
100
100
99.9
100
100
100
100
74.8
67
100
100
100
75
100
100
100
100
100
100
100
100
100
100
89.8
100
66.6
100
Greece
Malta
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Ireland
United Kingdom
United Kingdom
Portugal
Germany
Sweden
Spain
United Kingdom
India
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
NOTES
291
292
NOTES
Other Notes
COMPA N Y
GE AFOND Número Dos Fuerteventura S.A., Las Palmas, Gran Canaria
COUNTRY
Spain
Spain
Groupement Touristique International S.A.S., Lille
France
Hapag-Lloyd (Bahamas) Ltd., Nassau
Bahamas
Hapag-Lloyd Kreuzfahrten GmbH, Hamburg
Germany
Holiday Center S.A., Cala Serena / Cala d’Or
Spain
Horizon Holidays Ltd., Crawley
United Kingdom
Horizon Midlands (Properties) Ltd., Crawley
United Kingdom
I Viaggi del Turchese S.r.l., Fidenza
Italy
Iberotel International A.S., Antalya
Turkey
Iberotel Otelcilik A.S., Istanbul
Turkey
Imperial Cruising Company SARL , Heliopolis Cairo
Egypt
Inter Hotel SARL , Tunis
Tunisia
Itaria Limited, Nicosia
Cyprus
Jandia Playa S.A.U., Morro Jable, Fuerteventura
Spain
JetAir N.V., Oostende
Belgium
Jetair Real Estate N.V., Brussels
Belgium
Jetair Travel Distribution N.V., Oostende
Belgium
Jetaircenter N.V., Mechelen
Belgium
JNB (Bristol) Limited, Crawley
United Kingdom
Kras B.V., Ammerzoden
Netherlands
Label Tour EURL , Montreuil
France
Last-Minute-Restplatzreisen GmbH, Baden-Baden
Germany
L’ TUR Suisse AG , Dübendorf / ZH
Switzerland
l’tur tourismus Aktiengesellschaft, Baden-Baden
Germany
Lunn Poly (Jersey) Ltd., St. Helier
Jersey
Lunn Poly Ltd., Crawley
United Kingdom
Magic Hotels SA , Tunis
Tunisia
Magic Life Egypt for Hotels LLC , Sharm El-Sheikh
Egypt
Magic Life GmbH & Co KG , Vienna
Austria
Magic Life Greece S.A., Athens
Greece
Magic Tourism International S.A., Tunis
Tunisia
Medico Flugreisen GmbH, Baden-Baden
Germany
MX RIUSA II S.A. de C.V., Cabo San Lucas
Mexico
Nazar Nordic AB , Malmö
Sweden
Nordotel S.A.U., San Bartolomé de Tirajana
Spain
Nouvelles Frontières Senegal S.R.L., Dakar
Senegal
Ocean College LLC , Sharm El-Sheikh
Egypt
Ocean Ventures for Hotels and Tourism Services SAE , Sharm El-Sheikh Egypt
OF T REISEN GmbH, Rengsdorf
Germany
Orion Airways Ltd., Crawley
United Kingdom
Orion Airways Pension Trustees Ltd., Crawley
United Kingdom
Oy Finnmatkat AB , Helsinki
Finland
Paradise Hotels Management Company LLC , Cairo
Egypt
PATS N.V., Oostende
Belgium
Portland Holidays Direct Limited, Belfast
United Kingdom
Preussag Beteiligungsverwaltungs GmbH IX , Hanover
Germany
Professor Kohts Vei 108 A S , Stabekk
Norway
Promociones y Edificaciones Chiclana S.A., Palma de Mallorca
Spain
ProTel Gesellschaft für Kommunikation mbH, Rengsdorf
Germany
Puerto Plata Caribe Beach S.A., Puerto Plata
Dominican Republic
RCHM S.A.S., Agadir
Morocco
Revoli Star SA , San Bartolomé de Tirajana
Spain
GE AFOND Número Uno Lanzarote S.A., Las Palmas, Gran Canaria
100
100
100
100
100
100
100
100
100
100
100
90
100
100
100
100
100
100
100
100
100
100
100
99.5
70
100
100
100
100
100
100
100
100
100
100
100
100
100
98
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Other Notes
COMPA N Y
COUNTRY
Rideway Investment Ltd., London
Riu Jamaicotel Ltd., Negril
Riu Le Morne Ltd, Port Louis
RIUSA II S.A., Palma de Mallorca
RIUSA NED B.V., Amsterdam
Robinson AUSTRIA Clubhotel GmbH, Villach-Landskron
Robinson Club GmbH, Hanover
Robinson Club Italia S.p.A., Marina di Ugento
Robinson Club Maldives Private Limited, Malé
Robinson Clubhotel Turizm Ltd. Sti., Istanbul
Robinson Hoteles España S.A., Cala d’Or
Robinson Hotels Portugal S.A., Vila Nova de Cacela
Robinson Otelcilik A.S., Istanbul
Saint Martin RIUSA II SA S , Basse Terre
Simply Travel Holdings Ltd., Crawley
Skymead Leasing Ltd., Crawley
Société d’Exploitation du Paladien Marrakech SA , Marrakech
Société d’Investissement Aérien S.A., Casablanca
Société d’Investissement et d’Exploration du Paladien de Calcatoggio
(SIEPAC ), Montreuil
Société d’Investissement hotelier Almoravides S.A., Marrakech
Sons of South Sinai for Tourism Services and Supplies SAE ,
Sharm El-Sheikh
Specialist Holidays Group Ltd., Crawley
Star Club SA , San Bartolomé de Tirajana
Star Tour A / S, Copenhagen
Star Tour Holding A / S, Copenhagen
Startour-Stjernereiser A S , Stabekk
STIVA RII Ltd., Dublin
Sunshine Cruises Limited, Crawley
TC V Touristik-Computerverwaltungs GmbH, Baden-Baden
TdC Agricoltura Società agricola a r.l., Florence
TdC Amministrazione S.r.l., Florence
Tec4Jets B.V., Rijswijk ZH
Tec4Jets NV, Oostende
Tenuta di Castelfalfi S.p.A., Florence
Thomson Airways Limited, Crawley
Thomson Holidays Ltd. (Ireland), Dublin
Thomson Holidays Services, Inc., Orlando
Thomson Services Ltd., St. Peter Port
Thomson Travel Group (Holdings) Ltd., Crawley
Thomson Travel Holdings SA , Luxembourg
Thomson Travel International SA , Luxembourg
TICS GmbH Touristische Internet und Call Center Services,
Baden-Baden
TLT Reisebüro GmbH, Hanover
Travel Choice Limited, Crawley
Tropical Places Ltd., Crawley
T T Hotels Italia S.R.L., Rom
T T Hotels Turkey Otel Hizmetleri Turizm ve ticaret A S , Istanbul
TUI (IP ) Ltd., Crawley
TUI (Suisse) AG , Zurich
TUI (Suisse) Holding AG , Zurich
United Kingdom
Jamaica
Mauritius
Spain
Netherlands
Austria
Germany
Italy
Maldives
Turkey
Spain
Portugal
Turkey
France
United Kingdom
United Kingdom
Morocco
Morocco
100
100
100
50 *
100
100
100
100
100
100
100
67
100
100
100
100
100
100
France
Morocco
100
100
Egypt
United Kingdom
Spain
Denmark
Denmark
Norway
Ireland
United Kingdom
Germany
Italy
Italy
Netherlands
Belgium
Italy
United Kingdom
Ireland
United States
Guernsey
United Kingdom
Luxembourg
Luxembourg
84.1
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Germany
Germany
United Kingdom
United Kingdom
Italy
Turkey
United Kingdom
Switzerland
Switzerland
100
100
100
100
100
100
100
100
100
* Controlling influence
NOTES
293
294
NOTES
Other Notes
COMPA N Y
COUNTRY
TUI 4 U GmbH, Bremen
Tunisotel S.A.R.L., Tunis
Turcotel Turizm A.S., Istanbul
Turkuaz Insaat Turizm A.S., Ankara
Unijet Group Limited, Crawley
Unijet Leisure Limited, Crawley
Wolters Reisen GmbH, Stuhr
WonderCruises AB , Stockholm
WonderHolding AB , Stockholm
World of TUI Ltd., Crawley
Germany
Belgium
Netherlands
Germany
Austria
Germany
Country of Curaçao
Denmark
Germany
France
Germany
Germany
Germany
Netherlands
Netherlands
Sweden
Sweden
United Kingdom
Norway
Austria
United Kingdom
Poland
Poland
Austria
Switzerland
Switzerland
Ireland
Belgium
United Kingdom
Sweden
United Kingdom
United Kingdom
United Kingdom
Germany
Germany
Sweden
Germany
Tunisia
Turkey
Turkey
United Kingdom
United Kingdom
Germany
Sweden
Sweden
United Kingdom
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
74.9
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Specialist Group & Hotelbeds Group
600035 B.C. LTD , Canada
Acampora Travel S.r.l., Sorrent
Advantos Brazil Operandora de Turismo LTDA , Rio de Janeiro
Adventure Transport Limited, Crawley
Adventure Travels USA , Inc., Wilmington (Delaware)
Canada
Italy
Brazil
United Kingdom
United States
100
51
100
100
100
TUI Airlines Belgium N.V., Oostende
TUI Airlines Nederland B.V., Rijswijk
TUI aqtiv GmbH, Hanover
TUI Austria Holding GmbH, Vienna
TUI Business Services GmbH, Hanover
TUI Curaçao N.V., Curaçao
TUI Denmark Holding A / S, Copenhagen
TUI Deutschland GmbH, Hanover
TUI France SA S , Nanterre
TUI Hotel Betriebsgesellschaft mbH, Hanover
TUI Leisure Travel Service GmbH, Neuss
TUI Leisure Travel Special Tours GmbH, Hanover
TUI Nederland Holding N.V., Rijswijk
TUI Nederland N.V., Rijswijk
TUI Nordic Administration AB , Stockholm
TUI Nordic Holding AB , Stockholm
TUI Northern Europe Ltd., Crawley
TUI Norway Holding A S , Stabekk
TUI Österreich GmbH, Vienna
TUI Pension Scheme (UK ) Ltd., Crawley
TUI Poland Dystrybucja Sp. z o.o., Warsaw
TUI Poland Sp. z o.o., Warsaw
TUI Reisecenter Austria Business Travel GmbH, Vienna
TUI Service AG , Altendorf
TUI Suisse Retail AG , Zurich
TUI Travel (Ireland), Dublin
TUI Travel Belgium N.V., Oostende
TUI Travel Group Solutions Limited, Crawley
TUI Travel Holdings Sweden AB , Stockholm
TUI UK Ltd., Crawley
TUI UK Retail Limited, Crawley
TUI UK Transport Ltd., Crawley
TUI .com GmbH, Berlin
TUI fly GmbH, Langenhagen
TUI fly Nordic AB , Stockholm
TUI fly Vermarktungs GmbH, Hanover
Other Notes
COMPA N Y
COUNTRY
Africa Focus Tours Namibia Pty. Ltd., Windhuk
Alcor Yachting SA , Genf
Alkor Yat Turizm Isletmacileri A.S., Izmir
Americas Corporate Business Services, Inc., Wilmington (Delaware)
Antigua Charter Services, St. John’s
Apart Hotel Zarevo EOOD , Varna
Aragon Tours Limited, Crawley
Arccac Eurl, Bourg St. Maurice
ATC African Travel Concept Pty. Ltd., Cape Town
ATC Namibian Reflections Pty. Ltd., Cape Town
Audio Tours and Travel of Hong Kong Limited, Kowloon
B2B d.o.o., Cavtat
Beds on line SL , Palma de Mallorca
Blue Travel Partner Services S.A., Santo Domingo
Brightspark Travel Inc, State of Delaware
Cassata Travel s.r.l., Cefalù (Palermo)
CBQ No. 2 (UK ) Limited, Crawley
CBQ NO . 2 (US ) Limited, State of Delaware
CBQ No. 2 International Projects Limited, Crawley
Cel Obert SL , Sant Joan de Caselles
CHS Tour Services Ltd, Crawley
Citirama Ltd., Quatre Bornes
Club Turavia SA de C V, Cancún
Connoisseur Belgium BVBA , Nieuwpoort
Crown Blue Line France SA , Castelnaudary
Crown Blue Line GmbH, Kleinzerlang
Crown Blue Line Limited, Crawley
Crown Holidays Limited, Crawley
Crown Travel Limited, Crawley
Crystal Holidays, Inc, State of Delaware
Destination Services Greece Travel and Tourism SA , Athens
Destination Services Morocco SA , Agadir
Destination Services Singapore Pte Limited, Singapore
Destination Services Turkey Turizm ve Seyahat Anonim Sirketi,
Istanbul
E AC Language Centres (UK ) Limited, Edinburgh
Easy Market S.p.A., Rimini
Educatours Limited, Mississauga, Ontario
EEFC , Inc., State of Delaware
Emerald Star Limited, Dublin
Events International (Sports Travel) Limited, Crawley
Events International Limited, Crawley
Exodus Travels Australia Pty Ltd, Melbourne
Exodus Travels Canada Inc, Toronto
Exodus Travels Limited, Crawley
Exodus Travels USA , Inc., Emeryville, C A
Expediciones Amazonicas, S.A.C., Iquitos
Experience English Limited, Crawley
Fanatics Sports & Party Tours UK Limited, Crawley
Fanatics Sports and Party Tours PT Y Limited, Banksia
FanFirm Pty Ltd, Banksia
Fantravel.com, Inc., Wilmington (Delaware)
First Choice Expeditions, Inc., State of Delaware
Namibia
Switzerland
Turkey
United States
Antigua and Barbuda
Bulgaria
United Kingdom
France
South Africa
South Africa
Hong Kong
Croatia
Spain
Dominican Republic
United States
Italy
United Kingdom
United States
United Kingdom
Andorra
United Kingdom
Mauritius
Mexico
Belgium
France
Germany
United Kingdom
United Kingdom
United Kingdom
United States
Greece
Morocco
Singapore
100
100
99.7
100
100
100
100
100
50.1
100
99
100
100
99
100
66
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Turkey
United Kingdom
Italy
Canada
United States
Ireland
United Kingdom
United Kingdom
Australia
China
United Kingdom
United States
Peru
United Kingdom
United Kingdom
Australia
Australia
United States
United States
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
NOTES
295
296
NOTES
Other Notes
COMPA N Y
COUNTRY
First Choice Marine (BVI ) Ltd, British Virgin Islands
First Choice Marine (Malaysia) Snd Bhd, Malaysia
First Choice Marine Limited, Crawley
First Choice Sailing, Inc. (USA ) (also known as Sunsail, Inc.),
State of Delaware
Francotel Limited, Crawley
GEI -Moorings, LLC , State of Delaware
Global Obi, S.L., Palma de Mallorca
Great Atlantic Sports Travel, Inc., Wilmington (Delaware)
Gulliver Travel d.o.o., Dubrovnik
Gullivers Group Limited, Crawley
Gullivers Sports Travel Limited, Crawley
Hannibal Tour SA , Tunis
Hayes & Jarvis (Travel) Limited, Crawley
Headwater Holidays Limited, Crawley
Hellenic Sailing Holidays SA , Athens
Hellenic Sailing SA , Athens
Holidays Services S.A., Agadir
Hotelbeds (Shanghai) Commercial Services Co., Limited, Shanghai
Hotelbeds (Thailand) Limited, Bangkok
Hotelbeds Costa Rica SA , San José
Hotelbeds Dominicana SA , Santo Domingo
Hotelbeds Group SLU , Palma de Mallorca
Hotelbeds Hong Kong Limited, Kowloon
Hotelbeds Product SLU , Puerto de la Cruz, Teneriffa
Hotelbeds Spain, S.L.U., Palma de Mallorca
Hotelbeds Technology SLU , Palma de Mallorca
Hotelbeds UK Limited, Crawley
Hotelbeds USA Inc, Orlando
Hotelbeds, S.L.U., Palma de Mallorca
Hotelopia Holidays, S.L., Ibiza
Hotelopia SL , Palma de Mallorca
Intercruises Shoreside & Port Services Canada, Inc., Quebec
Intercruises Shoreside & Port Services PT Y LTD , Stanmore NSW
Intercruises Shoreside & Port Services S.a.r.l., Paris
Intercruises Shoreside & Port Services Sam, Monaco
Intercruises Shoreside & Port Services, Inc., State of Delaware
Intercruises Shoreside & Port Services, SLU , Barcelona
International Expeditions, Inc., State of Delaware
Intrav, Inc., State of Delaware
Isango India Private Limited, Delhi
Isango! Limited, Crawley
i-To-i Placements Limited, Carrick-on-Suir
i-To-i PT Y Ltd., Sydney
JBS Group US , Inc., Wilmington (Delaware)
Lapter Eurl, Macot La Plagne
Le Boat Netherlands B.V., Rotterdam
Le Passage to India Tours and Travels Pvt Ltd, Neu-Delhi
Le Piolet SCI , St Martin de Belleville, Savoie
Les Tours Jumpstreet Tours, Inc., Montreal
Liberate SLU , Palma de Mallorca
Lima Tours S.A.C., Lima
Lodges & Mountain Hotels SARL , Notre Dame de Bellecombe, Savoie
Virgin Islands (British)
Malaysia
United Kingdom
100
100
100
United States
United Kingdom
United States
Spain
United States
Croatia
United Kingdom
United Kingdom
Tunisia
United Kingdom
United Kingdom
Greece
Greece
Morocco
China
Thailand
Costa Rica
Dominican Republic
Spain
Hong Kong
Spain
Spain
Spain
United Kingdom
United States
Spain
Spain
Spain
Canada
Australia
France
Monaco
United States
Spain
United States
United States
India
United Kingdom
Ireland
Australia
United States
France
Netherlands
India
France
Canada
Spain
Peru
France
100
100
100
75.5
75
70
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
91
100
100
100
100
100
Other Notes
COMPA N Y
COUNTRY
Luso Ds – Agência de Viagens, Unipessoal Lda, Faro
Lusomice, Unipessoal Lda., Lisbon
Mainstream DS Dominicana S.A.S., Higuey
Manahe Ltd., Quatre Bornes
Manchester Academy Holdings Limited, Crawley
Manchester Academy Tours Limited, Crawley
Mariner International Asia Limited, Hongkong
Mariner International Travel, Inc., State of Delaware
Mariner Operations USA Inc, State of Delaware
Mariner Travel GmbH, Bad Vilbel
Mariner Travel SARL , Paris
Mariner Yacht Services SA , Le Marin
Mariner Yachts (Proprietary) Limited, Illovo
Master-Yachting GmbH, Eibelstadt
Maxi Yen SL , Palma de Mallorca
Meetings & Events International Limited, Crawley
Meetings & Events Spain S.L.U., Palma de Mallorca
Meetings & Events UK Limited, Crawley
MicronNexus GmbH, Hamburg
Molay Travel SARL , Molay-Littry, Calvados
Molay Travel SCI , Molay-Littry, Calvados
Mont Charvin Ski SARL , Paris
Moorings Grenadines Ltd., St. Vincent and Grenadines
Moorings Mexico SA de C V, La Paz
Moorings Yachting SA S , Paris
Moorings Yat Isletmecilgi Turizm Ve Tic Ltd, Mugla
MyPlanet Holding A / S, Holstebro
MyPlanet International A / S, Holstebro
MyPlanet Sweden AB , Göteborg
Pacific World (Beijing) Travel Agency Co., Ltd., Peking
Pacific World (Shanghai) Travel Agency Co. Limited, Shanghai
Pacific World Company Limited, HCM City
Pacific World Destination East Sdn. Bhd., Penang
Pacific World Meetings & Events (Thailand) Limited, Bangkok
Pacific World Meetings & Events Hellas Travel Limited, Athens
Pacific World Meetings & Events Hong Kong, Limited, Hongkong
Pacific World Meetings & Events SAM , Monaco
Pacific World Meetings & Events Singapore Pte. Ltd, Singapore
Pacific World Singapore Pte Limited, Singapore
PE AK DMC North America, Inc, Wilmington (Delaware)
Petit Palais Srl, Valtournenche
Platinum Event Travel Limited, Crawley
Porter and Haylett Limited, Crawley
Premier Holidays Afloat Limited, Dublin
Premiere International Corp, Gardena
Prestige Boating Holidays Limited, Dublin
PT. Pacific World Nusantara, Bali
Quark Expeditions, Inc., State of Delaware
Real Travel Ltd, Crawley
Sawadee Amsterdam BV, Amsterdam
SER AC Travel GmbH, Zermatt
Ski Bound Limited, Crawley
Skibound France SARL , Notre Dame de Bellecombe
Portugal
Portugal
Dominican Republic
Mauritius
United Kingdom
United Kingdom
Hong Kong
United States
United States
Germany
France
Morocco
South Africa
Germany
Spain
United Kingdom
Spain
United Kingdom
Germany
France
France
France
Saint Vincent and the Grenadines
Mexico
France
Turkey
Denmark
Denmark
Sweden
China
China
Vietnam
Malaysia
Thailand
Greece
China
Monaco
Singapore
Singapore
United States
Italy
United Kingdom
United Kingdom
Ireland
United States
Ireland
Indonesia
United States
United Kingdom
Netherlands
Switzerland
United Kingdom
France
100
100
100
51
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
90
65
49 *
100
100
99.9
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
NOTES
297
298
NOTES
Other Notes
COMPA N Y
Société Marocaine pour le Developpement des Transports
Touristiques S.A., Agadir
Specialist Holiday Group Ireland Ltd., Dublin
Specialist Holidays (Travel) Limited, Crawley
Specialist Holidays Contracting Ltd., Crawley
Specialist Holidays Ltd., Crawley
Specialist Holidays, Inc., Mississauga, Ontario
Sports Executive Travel Limited, Crawley
Sportsworld (Beijing) Sports Management Consulting Limited
Company, Peking
Sportsworld Eventos Ltda, São Paulo
Sportsworld Group Limited, Crawley
Sportsworld Holdings Limited, Crawley
Student City S.a.r.l., Paris
Student City Travel Limited, Crawley
Student Skiing Limited, Crawley
Studentcity.com, Inc., State of Delaware
Summer Times International Ltd., Quatre Bornes
Summer Times Ltd., Quatre Bornes
Sunsail (Antigua) Limited, Antigua
Sunsail (Australia) Pty Ltd, Hamilton Island, Queensland
Sunsail (Seychelles) Limited, Mahé
Sunsail (Thailand) Company Ltd, Phuket
Sunsail Adriatic d.o.o., Split
Sunsail Hellas MEPE , Athens
Sunsail International B.V., Rotterdam
Sunsail Limited, Crawley
Sunsail SA S , Castelnaudary
Sunsail Worldwide Sailing Limited, Crawley
Sunsail Worldwide Sailing St. Vincent Limited, St. Vincent and
G renadines
T.T. Services Samoa Ltd, Apia
Tantur Turizm Seyahat A.S., Istanbul
TC S & Starquest Expeditions, Inc., Seattle
TC S Expeditions, Inc., State of Delaware
Teamlink Travel Limited, Crawley
The English Language Centre York Limited, York
The Moorings (Bahamas) Ltd, Nassau
The Moorings (Seychelles) Limited, Mahé
The Moorings (St. Lucia) LTD , St. Lucia
The Moorings Belize Limited, Belize City
The Moorings d.o.o., Split
The Moorings Limited, British Virgin Islands
The Moorings Sailing Holidays Limited, Crawley
The Moorings SA S , Utoroa, Raiatea
Thomson Reisen GmbH, St. Johann
Thomson Sport (UK ) Limited, Crawley
Tigdiv Eurl, Tignes
Transfar – Agencia de Viagens e Turismo Lda., Faro
TR AVCOA Corporation, State of Delaware
Travel Class Holdings Limited, Crawley
Travel Class Limited, Crawley
Travel Contracting Limited, Crawley
COUNTRY
Morocco
Ireland
United Kingdom
United Kingdom
United Kingdom
Canada
United Kingdom
100
100
100
100
100
100
100
China
Brazil
United Kingdom
United Kingdom
France
United Kingdom
United Kingdom
United States
Mauritius
Mauritius
Antigua and Barbuda
Australia
Seychelles
Thailand
Croatia
Greece
Netherlands
United Kingdom
France
United Kingdom
100
100
100
100
100
100
100
100
100
100
100
100
100
30 *
100
100
100
100
100
100
Saint Vincent and the Grenadines
Samoa
Turkey
United States
United States
United Kingdom
United Kingdom
Bahamas
Seychelles
Saint Lucia
Belize
Croatia
United Kingdom
French Polynesia
Austria
United Kingdom
France
Portugal
United States
United Kingdom
United Kingdom
United Kingdom
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
99.9
100
100
100
100
Other Notes
COMPA N Y
COUNTRY
Travel Partner Brasil Agencia de Turismo e Viagens Ltda, Jundiai,
State of São Paulo
Travel Partner Bulgaria EOOD , Varna
Travel Partner Turkey Turizm ve Seyahat Anonim Sirketi, Istanbul
Travel Scot World Limited, Crawley
Travel Services Europe Spain SL , Barcelona
Travel Turf, Inc., Allentown
Travelbound European Tours Limited, Crawley
Travelmood Limited, Crawley
Trek America Travel Limited, Crawley
Trek Investco Limited, Crawley
T T Enterprises Private Ltd, Chennai
T T International Services Broker LLC , Abu Dhabi
T T Services AB , Stockholm
T T Services Kiribati Ltd, South Tarawa
T T Services Nauru Ltd, Yaren
T T Services New Zealand Ltd, Auckland
T T Services Vanuatu Ltd, Port Vila
T T Visa Outsourcing Limited, Crawley
T T Visa Services Limited, Crawley
T T Visa Services Pte Limited, Singapore
T T Visa Services, Inc., Wilmington (Delaware)
T TS Consultancy Services Private Ltd, Chennai
T TSS Limited, Crawley
T TSS Transportation Limited, Crawley
TUI (Cyprus) Ltd., Nicosia
TUI China Travel CO . Ltd., Peking
TUI España Turismo S.A., Barcelona
TUI Hellas Travel and Tourism SA , Athens
TUI Holding Spain S.L., Barcelona
TUI Italia S.R.L., Mailand
TUI Marine Grenada Limited, St. George’s
TUI Mexicana SA de C V, Mexico
TUI PORTUGAL – Agencia de Viagens e Turismo S.A., Faro
TUI Travel Partner Services Japan KK , Tokio
TUI UK Italia S.r.L., Turin
Tunisie Investment Services Holding S.A., Tunis
Tunisie Voyages S.A., Tunis
Turismo Asia Company Ltd., Bangkok
Ultramar Express Transport S.A., Palma de Mallorca
Versun Yachts NSA , Athens
Voukouvalides Travel & Tourism S.A., Kos
We Love Rugby Pty Ltd, Banksia
Williment Travel Group Limited, Wellington
World Challenge Expeditions Limited, Crawley
World Challenge Expeditions Pty Ltd, Victoria
World Challenge Expeditions, Inc., Cambridge, MA
World Challenge NZ Limited, Wellington
Yachts International Limited, British Virgin Islands
YIL , LLC , State of Delaware
Your Man Tours, Inc., El Segundo, C A
Zegrahm Expeditions, Inc., Seattle
Brazil
Bulgaria
Turkey
United Kingdom
Spain
United States
United Kingdom
United Kingdom
United Kingdom
United Kingdom
India
United Arab Emirates
Sweden
Kiribati
Nauru
New Zealand
Vanuatu
United Kingdom
United Kingdom
Singapore
United States
India
United Kingdom
United Kingdom
Cyprus
China
Spain
Greece
Spain
Italy
Grenada
Mexico
Portugal
Japan
Italy
Tunisia
Tunisia
Thailand
Spain
Greece
Greece
Australia
New Zealand
United Kingdom
Australia
United States
New Zealand
United States
United States
United States
99.9
100
100
100
100
100
100
100
100
100
100
49 *
90
100
100
100
100
100
100
100
100
100
100
100
100
75
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
NOTES
299
300
NOTES
Other Notes
COMPA N Y
COUNTRY
The LateRooms Group
AsiaRooms Business Services (Thailand) Co., Ltd, Bangkok
Asiarooms Pte Ltd, Singapore
Late Rooms Limited, Crawley
Late Rooms Services Australia PT Y LTD , Dawes Point
Mala Pronta Viagens e Turismo Ltda., Curitiba
Thailand
Singapore
United Kingdom
Australia
Brazil
100
100
100
100
100
All other segments
Absolut Insurance Limited, Guernsey
Amber Nominee GP Limited, Crawley
Canada Maritime Services Limited, Crawley
Canadian Pacific (UK ) Limited, Crawley
Cast Agencies Europe Limited, Crawley
Cast Group Services Limited, Crawley
Cheqqer B.V., Rijswijk
Contship Holdings Limited, Crawley
CP Ships (Bermuda) Ltd., Hamilton
CP Ships (UK ) Limited, Crawley
CP Ships Ltd., Saint John
CPS Holdings (No. 2) Limited, Crawley
CPS Number 4 Limited, Crawley
DEFAG Beteiligungsverwaltungs GmbH I, Hanover
DEFAG Beteiligungsverwaltungs GmbH III , Hanover
First Choice Holdings, Inc., State of Delaware
First Choice Holidays Finance Limited, Crawley
First Choice Holidays Limited, Crawley
First Choice Leisure Limited, Crawley
First Choice Olympic Limited, Crawley
First Choice Overseas Holdings Limited, Crawley
First Choice USA , Crawley
Germanair Flugzeug Leasing GmbH, Hamburg
Hapag-Lloyd Executive GmbH, Langenhagen
LateRooms Group Holding (Brazil) Limited, Crawley
LateRooms Group Holding (UK ) Limited, Crawley
LateRooms Group Holding Limited, Crawley
Leibniz-Service GmbH, Hanover
Manufacturer’s Serialnumber 852 Limited, Dublin
Owners Abroad España, S.A., Las Palmas
PM Peiner Maschinen GmbH, Hanover
Preussag Immobilien GmbH, Salzgitter
Preussag UK Ltd., Crawley
Sovereign Tour Operations Limited, Crawley
Thomson Airways (Services) Limited, Crawley
Thomson Airways Trustee Limited, Crawley
travel-Ba.Sys GmbH & Co KG , Mülheim an der Ruhr
Trina Group Limited, Crawley
T TG (Jersey) Limited, Jersey
TUI Aviation GmbH, Hanover
TUI Beteiligungs GmbH, Hanover
TUI Canada Holdings, Inc, Toronto
TUI Connect GmbH, Hanover
TUI Group Services GmbH, Hanover
TUI Group UK Trustee Limited, Crawley
Guernsey
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Netherlands
United Kingdom
Bermuda
United Kingdom
Canada
United Kingdom
United Kingdom
Germany
Germany
United States
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Germany
Germany
United Kingdom
United Kingdom
United Kingdom
Germany
Ireland
Spain
Germany
Germany
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Germany
United Kingdom
Jersey
Germany
Germany
Canada
Germany
Germany
United Kingdom
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
83.5
100
100
100
100
100
100
100
100
Other Notes
COMPA N Y
COUNTRY
TUI Holdings (Australia) PT Y Limited, Queensland
Australia
Germany
Spain
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Germany
Portugal
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
95
Canada
Sri Lanka
Austria
Greece
Cyprus
Turkey
Barbados
Germany
Germany
Egypt
Morocco
Egypt
Egypt
Turkey
49
40
50
50
49.9
50
49
50
50
50
35
50
50
50
Germany
Egypt
Spain
Germany
Egypt
Egypt
Croatia
Panama
Egypt
Egypt
Egypt
Portugal
Germany
Spain
Spain
50.1
50
50
25.2
51
50
33.3
50
50
50
50
33
25.1
49
50
TUI InfoTec GmbH, Hanover
TUI Spain, SLU , Madrid
TUI Travel Amber E&W LLP, Crawley
TUI Travel Amber Limited, Edinburgh
TUI Travel Amber Scot LP, Edinburgh
TUI Travel Aviation Finance Limited, Crawley
TUI Travel Common Investment Fund Trustee Limited, Crawley
TUI Travel Group Management Services Limited, Crawley
TUI Travel Healthcare Limited, Crawley
TUI Travel Holdings Limited, Crawley
TUI Travel Limited, Crawley
TUI Travel Nominee Limited, Crawley
TUI Travel Overseas Holdings Limited, Crawley
TUI Travel SA S Adventure Limited, Crawley
TUI Travel SA S Holdings Limited, Tring, Hertfordshire
TUI Travel SA S Services Limited, Crawley
TUI -Hapag Beteiligungs GmbH, Hanover
Viagens Aurora Limitada, Albufeira
Joint Ventures and associated companies
Tourism
2332491 Ontario, Inc, Toronto
Ahungalla Resorts Limited, Bentota
alps & cities 4ever GmbH, Vienna
Atlantica Hellas S.A., Rhodos
Atlantica Hotels and Resorts S.A., Lemesos
Bartu Turizm Yatirimlari Anonim Sirketi, Istanbul
Blue Diamond Hotels and Resorts, Inc., St. Michael
Bonitos GmbH & Co KG , Frankfurt / Main
DER Reisecenter TUI GmbH, Berlin
ENC for touristic Projects Company S.A.E., Sharm El-Sheikh
Etapex, S.A., Agadir
Fanara Residence for Hotels S.A.E., Sharm El-Sheikh
First Om El Gorayfat Company for Hotels S.A.E., Mersa Allam
GBH Turizm Sanayi Isletmecilik ve Ticaret A.S., Istanbul
GeBeCo Gesellschaft für internationale Begegnung und
Cooperation mbH & Co. KG , Kiel
Golden Lotus Hotel Company S.A.E., Luxor
GRUPOTEL DOS S.A., Can Picafort
InteRes Gesellschaft für Informationstechnologie mbH, Darmstadt
Jaz Hotels & Resorts S.A.E., Cairo
Kamarayat Nabq Company for Hotels S.A.E., Sharm El-Sheikh
Karisma Hotels Adriatic d.o.o., Zagreb
Karisma Hotels Caribbean S.A., Panama
Makadi Club for Hotels S.A.E., Hurghada
Mirage Resorts Company S.A.E., Hurghada
Oasis Company for Hotels S.A.E., Hurghada
Quinta da Ria Empreendimentos do Algarve, S.A., Vila Nova de Cacela
Raiffeisen-Tours RT-Reisen GmbH, Burghausen
Riu Hotels S.A., Palma de Mallorca
Safeharbour One SL , Barcelona
NOTES
301
302
NOTES
Other Notes
COMPA N Y
COUNTRY
Sharm El Maya Touristic Hotels Co. S.A.E., Cairo
Sun Oasis for Hotels Company S.A.E., Hurghada
Sunwing Travel Group, Inc, Toronto
Teckcenter Reisebüro GmbH, Kirchheim / Teck
Tikida Bay S.A., Agadir
TIKIDA DUNE S S.A., Agadir
Tikida Palmeraie S.A., Marrakech
Togebi Holdings Ltd, Nicosia, Cyprus
TR AVEL S tar GmbH, Hanover
TUI Cruises GmbH, Hamburg
UK Hotel Holdings F ZC L.L.C., Fujairah
Vacation Express USA Corp., Atlanta
Egypt
Egypt
Canada
Germany
Morocco
Morocco
Morocco
Cyprus
Germany
Germany
United Arab Emirates
United States
50
50
49
50
34
30
33.3
49
50
50
50
49
Specialist Travel
Aeolos Travel LLP, Nicosia
Aitken Spence Travels Ltd, Colombo
Alpha Tourism and Marketing Services Ltd., Port Louis
Alpha Travel (U.K.) Limited, Harrow
Holiday Travel (Israel) Limited, Airport City
Pollman’s Tours and Safaris Limited, Nairobi
Ranger Safaris Ltd., Arusha
Travco Group Holding S.A.E., Cairo
T T Services Lanka Private Ltd, Colombo
Cyprus
Sri Lanka
Mauritius
United Kingdom
Israel
Kenya
Tanzania
Egypt
Sri Lanka
49.9
50
25
25
50
25
25
50
50
All other segments
.BOSYS SOF T WARE GMBH , Hamburg
ACCON -RVS Accounting & Consulting GmbH, Berlin
Germany
Germany
25.2
50
Responsibility s tatement by management
RESPONSIBILIT Y
S TAT E M E N T
BY MANAGEMENT
To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated financial
statements give a true and fair view of the net assets, financial position and results of operations of the Group,
and the Group Management Report includes a fair review of the development and performance of the business
and the position of the Group, together with a description of the principal opportunities and risks associated with
the expected development of the Group.
The Executive Board
Friedrich Joussen
Peter Long
Horst Baier
David Burling
Sebastian Ebel
Dr Elke Eller
William Waggott
303
304
INDEPENDENT
AUDITOR ’S REPORT
To TUI AG , Berlin and Hannover
Report on the Audit of the Consolidated Financial Statements
Audit Opinion
We have audited the consolidated financial statements of TUI AG , Berlin and Hannover, and its subsidiaries, which
comprise the consolidated statement of financial position as at 30 September 2015, the consolidated income
statement, the consolidated statement of comprehensive income, the consolidated statement of changes in
equity, the consolidated statement of cash flows for the year then ended and the notes to the consolidated
In our opinion based on the findings of our audit, the accompanying consolidated financial statements comply, in
all material respects, with International Financial Reporting Standards, as adopted by the EU , and the additional
requirements of German commercial law pursuant to § (Article) 315a Abs. (paragraph) 1 HGB (“Handelsgesetzbuch”: “German Commercial Code”) and give a true and fair view of the net assets and financial position of the
Group as at 30 September 2015 and the results of operations for the financial year then ended, in accordance with
these requirements.
According to § 322 Abs. 3 Satz (sentence) 1 HGB , we state that our audit of the consolidated financial statements
has not led to any reservations.
Basis for Audit Opinion
We conducted our audit in accordance with § 317 HGB and German generally accepted standards for the audit of
financial statements promulgated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany;
IDW ) and additionally considered the International Standards on Auditing (ISA ). Our responsibilities under those
provisions and standards are further described in the “Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements” section of our report. We are independent of the Group in accordance with the provisions
of German commercial law and professional standards as well as the IESBA Code of Ethics for Professional
Acccountants of the International Ethics Standards Board for Accountants (IESBA Code) and we have fulfilled our
other professional responsibilities in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
K E Y A U D I T M AT T E R S
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the consolidated financial statements of the current period. These matters were addressed in the context of our
audit of the consolidated financial statements as a whole, and in forming our audit opinion thereon, and we do not
provide a separate audit opinion on these matters.
In our view, the key audit matters were as follows:
1
2
3
4
5
6
Acquisition of non-controlling interests in TUI Travel PLC by TUI AG
Recoverability of goodwill
Recoverability of shares in Hapag-Lloyd AG
Provisions and other areas of judgment
Deferred tax assets relating to losses carried forward and risks related to German trade tax
EBITA adjustments
Our presentation of these key audit matters has been structured as follows:
3
Matter and issue
Audit approach and findings
Reference to further information
1
Acquisition of non-controlling interests in TUI Travel PLC by TUI AG
1
2
FINANCIAL RECOGNITION OF ACQUISITION OF NON-CONTROLLING INTERE ST
1 During the financial year TUI AG acquired all non-controlling interests in TUI Travel PLC , Crawley / United
Kingdom, (hereinafter “ TUI Travel PLC ”) by TUI AG . The Acquisition was executed by capital increase of TUI AG
in return for shares in TUI Travel PLC as contribution in kind. Thereby the shareholders of TUI Travel PLC (except
TUI AG ) received for each share of TUI Travel PLC 0.399 new shares of TUI AG . The subscribed capital of TUI AG
increased therefore by € 621 million. The measurement of the shares issued as consideration was conducted
at fair value on stock issue (listing price on registration date). This resulted in a reduction of profit reserves by
€ 3,313 million. The difference of this amount (€ 3,313 million) and the increase of subscribed capital (€ 621 million)
less the related expenses (€ 16 million) results in an increase of capital reserve by € 2,676 million. The non-
controlling interests recorded in Group’s equity up to the acquisition of € – 606 million less related expenses
(€ 46 million) have been directly offset against profit reserves, which therefore did decrease. Overall the amount
of the Group’s equity was reduced by the incurred expenses of € 62 million. This matter was from our point of view
of particular importance because of its material impact on Group’s equity accounts.
2 With respect to the recognition of the acquisition of non-controlling interests we intensively dealt during our audit
with the underlying legal requirements as well as the assessments of the involved consultants on this transaction.
We considered the measurement of the shares issued as contribution in kind based on the listing price at the date
of registration in the commercial register. Furthermore, we examined the amount of non-controlling interests
for write off. Based on the procedures performed we were able to satisfy ourselves that the acquisition of non-
controlling interests in TUI Travel PLC is properly presented.
3 The Company’s disclosures about acquisition of non-controlling interests and their impact on Group’s equity
accounts are contained in section “Merger of TUI AG with TUI Travel PLC ” and in sections 26 to 28 of the notes
E X P E N S E S R E L AT E D T O T H E A C Q U I S I T I O N O F N O N - C O N T R O L L I N G I N T E R E S T S
1 In connection with the acquisition of non-controlling interests in TUI Travel PLC , expenses relating to the fees
from banks and consulting firms accrued. Where material expenses are directly related to the capital increase or
the acquisition of non-controlling interests, the costs incurred have to be directly offset against equity. Therefore,
€ 62 million were classified directly in equity. This matter was from our point of view of particular importance
because the underlying allocation rules are very complex.
305
306
2 During our audit we satisfied ourselves of the proper recognition of the accrued expenses based on the evidence
submitted to us. Furthermore, we reperformed the allocation of expenses applied by Management and accept the
classification made by Management.
3 The Company’s disclosures about the recognition of expenses in connection with the acquisition of non-
controlling interests in equity are provided in the statement of changes in equity and are further contained in
section “Merger of TUI AG with TUI Travel PLC ” of the notes to the consolidated financial statements.
CHANGE IN SEGMENT REPORTING
1 As part of TUI AG ’s organisational and strategic reorganisation following the acquisition of non-controlling
interests in TUI Travel PLC , the TUI Group’s internal reporting structure was reorganized. Since the internal
reporting structure is used as a basis for determining the segment structure under IFRS 8 (segment reporting),
consequently the new reporting structure resulted in a change in TUI AG ’s segment reporting. From our point of
view, this matter was of particular importance, because in the context of capital market communications the segment
reporting has a special significance and the segment structure presented also affects other accounting-related
areas (particularly the reallocation of goodwill and the resultant implication on testing of goodwill for impairment
as well as the allocation of the remaining assets and the disclosure of discontinued operations).
2 During our audit we, amongst other procedures, considered the internal reporting and its subcategorisation of
the individual reporting units; and reconciled this structure to the segment structure used in the segment reporting.
Moreover, we examined the method applied for the reallocation of goodwill. We were able to satisfy ourselves that
the changes in segment reporting applied by Management were consistent with the reorganisation of the internal
reporting structure.
The Company’s disclosures about the change of the internal reporting structure regarding the acquisition of
non-controlling interests are contained in section “Comments on Segments” of the notes to the consolidated
3
2
Recoverability of goodwill
1 Goodwill amounting to € 3.2 million in total is reported under the goodwill line item in the statement of financial
position in the consolidated financial statements of TUI AG . Goodwill is tested by the Company for impairment as
of June 30 of the financial year (impairment test). While in the previous year goodwill for the former TUI Travel
segment was tested for impairment based on this segment, in this financial year the goodwill for former TUI
Travel has been split into the redefined segments after the acquisition of non-controlling interests and in each
case tested for impairment at that level. As TUI Travel PLC was no longer listed at the reporting date and listing
prices could therefore not be used for the measurement of goodwill, a discounted cash flow (DCF ) valuation
technique was used for measurement for the first time. From our point of view, this matter was of particular
importance, because the result of this measurement depends to a large extent on Management’s assessment of
future cash inflows and the discount rate used, and is therefore subject to considerable uncertainty.
2 With respect to the appropriateness of the future cash inflows used in the calculation we satisfied ourselves,
amongst other procedures, by agreeing this information with the current budgets in the three-year plan adopted
by Management and approved by the supervisory board, as well as by comparison with general and sector-specific
market expectations. With the knowledge that even relatively small changes in the discount rate applied can have
material effects on the value of goodwill calculated in this way, we also focused our testing on the parameters
used to determine the discount rate applied, including the weighted average cost of capital, and reperformed the
calculations. Due to the materiality of goodwill (representing approximately 22 % of consolidated total assets) and
the fact that its measurement also depends on economic conditions which are outside of the company’s sphere
of influence, we also performed sensitivity analyses for cash-generating units with low coverage (net book value
compared to present value) and found that the respective goodwill was sufficiently covered by discounted future
cash flows. Overall, we consider the measurement inputs and assumptions used by Management to be in line with
our expectations.
The Company’s goodwill disclosures are contained in section 14 of the notes to the consolidated financial
statements.
3
3
Recoverability of shares in Hapag-Lloyd AG
In TUI AG ’s consolidated financial statements, the shares in Hapag-Lloyd AG , Hamburg, (hereinafter “Hapag-
Lloyd AG”) are reported in the amount of € 335 million after a value adjustment of € 147 million and are presented
as financial instruments within the balance sheet item financial assets available for sale. These shares are measured
at fair value, with changes in fair value of less than 20 % of original costs being recognised directly in equity pursuant
to TUI AG ’s internal accounting guidelines. Changes in measurement greater or equal 20 % result in an impairment
and are classified in the income statement. As Hapag-Lloyd AG was not listed as of the reporting date and it was
therefore not possible to use a listing price for the measurement of the shares, measurement took place using a
discounted cash flow valuation technique. The Company’s measurement showed that the previous carrying
amount could no longer be covered by future cash inflows. This led to the recognition of an impairment loss of
€ 147 million. From our point of view, this matter was of particular importance, because the result of this measurement depends to a large extent on Management’s assessment of future cash inflows and the discount rate used,
and is subject to considerable uncertainty.
1
2 Amongst other procedures, we examined the measurement of the shares in Hapag-Lloyd AG and verified the
inputs used in connection with the valuation technique using company-specific information as well as sector-specific
market data and expectations. We also evaluated the appropriateness of the threshold for impairments specified
by TUI AG . Even taking into account the relevant market data (e. g. the first listing price of Hapag-Lloyd AG dated
6 November 2015), we found the measurement of the shares in Hapag-Lloyd AG to be within an acceptable range
and we accept Management’s assessment.
3 The Company’s disclosures about financial assets available-for-sale are contained in section “Accounting and
measurement methods” and section 19 of the notes to the consolidated financial statements.
307
308
4
Provisions and other areas of judgment
1 In TUI AG ’s consolidated financial statements, prepayments to hotels totalling € 967 million are reported under
the balance sheet line item trade receivables and other assets; provisions for aircraft maintenance in the amount
of € 564 million are reported under the balance sheet line item other provisions. In addition, provisions for pensions
and similar obligations of € 1,147 million are reported. From our point of view, this matter was of particular importance, because recognition and measurement of these material items are based to a large extent on Management’s
estimates and assumptions.
2 With the knowledge that estimated values result in an increased risk of material misstatements within the
consolidated financial statements and that Management’s measurement decisions have a direct and significant
effect on consolidated profit, we assessed the appropriateness of the carrying amounts inter alia by comparing
these amounts with historical data and by referring to contracts provided to us. Amongst other tests, we
• assessed the recoverability of prepayments to hotels, considering the background of current political developments in Greece and the incidents in Tunisia and Turkey, based on the repayment plans agreed with the respective
hoteliers, the possibilities to offset payments with future overnight accommodation services and the framework
agreements,
• reperformed the calculation of the costs expected for maintenance expenses for aircraft maintenance based
on group-wide maintenance agreements, the price increases expected based on external market forecasts and
the discount rates applied and
• assessed the appropriateness of the key assumptions and inputs used to calculate pension provisions by
involving the expertise of our internal pension valuation specialists.
In doing so, we were able to satisfy ourselves that the estimates applied and the assumptions made by Management
were sufficiently reasonable and supported with reference to historical data or third party information to justify
the recognition and measurement of the material provisions and the other areas where judgment was involved.
3 The Company’s disclosures about trade receivables and other assets as well as provisions are contained in
sections 20 as well as 32 and 33 of the notes to the consolidated financial statements.
5
Deferred Taxes assets relating to losses carried forward and risks related to
German trade tax
1 Deferred tax assets of € 331 million (of which € 239 million relate to losses carried forward) are reported in the
consolidated statement of financial position in the consolidated financial statements of TUI AG . Due to the acquisition of non-controlling interest in TUI Travel PLC , the tax affairs have been restructured in Germany with the
consequence of deferred tax assets of € 145 million being recognised by TUI AG relating to losses carried forward.
Furthermore, there are tax risks as certain hotel expenses may not be completely deductible for the determination of German trade tax. Management estimates the probability of occurrence for these risks related to German
trade tax to be less than 50 %. Therefore, a contingent liability is disclosed, which does not result in a provision.
Based on updated estimates this contingent liability considerably dropped to € 42 million from € 113 million previous year. From our point of view, these matters were of particular importance, because they depend to a large
extent on estimates and assumptions made by Management, and is subject to uncertainties.
2 Within our audit of these tax matters we added internal tax accounting specialists to our audit team. With their
support, we assessed the internal processes and controls implemented to record tax matters. With respect to the
tax restructuring, we also questioned the date when deferred taxes were recognized as well as Management’s
underlying reasons. We assessed the recoverability of deferred tax assets relating to losses carried forward and
deductible temporary differences on the basis of the Company’s internal forecasts for future taxable income
position of TUI AG and its material controlled entities for income tax purposes using Management’s planning and
evaluated the appropriateness of the planning framework used. Furthermore, we examined the reconciliation to
the tax expense. Based on expert opinions we gained an understanding about the tax risks from the treatment of
certain hotel expenses in connection with the German trade tax and we evaluated the appropriateness of the
financial recognition. We were able to retrace the assumptions made by Management concerning the recognition
and measurement of deferred taxes as well as the risk relating to German trade tax and accept Management’s
assessments.
3 The Company’s disclosures about deferred taxes are contained in the notes to the consolidated financial statements in section “accounting policies” as well as in sections 9, 22, 37 and for tax disputes in section 40. In addition,
further disclosures about the acquisition of non-controlling interests in TUI Travel PLC are in section “Merger of
TUI AG with TUI Travel PLC ” of the notes to the consolidated financial statements.
6
EBITA adjustments
1 For the TUI Group’s management and analysis purposes, operating profit (earnings before interest, taxes and
amortization – EBITA ) is used and adjusted for one-off effects and non-operating effects on profit. Adjustments
to EBITA in the amount of € 204 million have been reported in the consolidated financial statements of TUI AG .
Underlying EBITA is used for capital market communication as a core financial performance indicator. Furthermore, underlying EBITA is used as a target achievement standard for the annual performance-related remuneration of TUI AG ’s middle management. The adjustments to EBITA were of particular importance during our audit,
because the applied adjustments are based on TUI AG ’s internal accounting guidelines and there is a risk of bias
in Management’s judgment.
2 We reperformed the calculation of underlying EBITA and assessed the identification of extraordinary effects on
profit and non-operating effects on profit. Based on the knowledge obtained during the audit of the consolidated
financial statements and the information provided to us by Management, we examined whether, the adjustments
made are in line with the definition and the procedural method stated in the comments on segment reporting. We
were able to satisfy ourselves that the adjustments applied to EBITA by Management were consistent with
TUI AG ’s internal accounting guideline and continuous applied.
3 The Company’s disclosures about the adjustments to EBITA as well as their determination are described under
“Comments on Segments” in the segment reporting of the notes to the consolidated financial statements.
Other Information
Management is responsible for the other information. The other information compromises
• the Corporate Governance- Report according to section 3.1 of the German Corporate Governance Code,
• the Management’s Corporate Governance Statement pursuant to § 289a HGB
• the report concerning the UK Corporate Governance Code according to section 9.8.6 R (5) of the listing rules
in the United Kingdom and
• the report to shareholders according to section 9.8.8 R of the listing rules in the United Kingdom as well as
• other parts of the annual report of TUI AG , Berlin and Hannover, for the financial year ending 30 September 2015, which were not subject of our audit.
Our audit opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
309
310
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Supervisory Board for the Consolidated
Financial Statements
Management is responsible for the preparation of the consolidated financial statements and, therefore, that these
statements give a true and fair view of the net assets, financial position and results of operations of the Group in
accordance with IFRSs, as adopted by the EU, and the additional requirements of German commercial law pursuant
to § 315a Abs. 1 HGB . Furthermore, Management is responsible for such internal controls as Management determines are necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, Management is responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern as well as using the going
concern basis of accounting unless Management either intends to liquidate the Group or to cease operations, or
has no realistic alternative but to do so.
The supervisory board of TUI AG , Berlin and Hannover, is responsible for overseeing the Company’s financial
reporting process.
Auditor’s Responsibility for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with § 317 HGB and German generally accepted standards for the audit of financial statements promulgated
by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany; IDW ) and additional consideration
of the ISA will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with German generally accepted standards for the audit of financial statements
promulgated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany; IDW ) and additional
consideration of the ISA , we exercise professional judgment and maintain professional scepticism throughout the
audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may include collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal controls relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an audit opinion on the effectiveness
of the Group’s internal controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by Management.
• Conclude on the appropriateness of Management’s use of the going concern basis of accounting, and based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify our audit opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and
events in a manner that the consolidated financial statements give a true and fair view of the net assets and
financial position of the Group in accordance with International Financial Reporting Standards, as adopted by
the EU , and the additional requirements of German commercial law pursuant to § 315a Abs. 1 HGB .
• Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an audit opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the group audit. We remain solely responsible for
our audit opinion.
We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide a statement to the Supervisory Board that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Supervisory Board, we determine those matters that were of most
significance in the audit of the consolidated financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
REPORT ON THE AUDIT OF THE GROUP MANAGEMENT REPORT
We have audited the accompanying group management report, which is combined with the management report
of TUI AG , Berlin and Hannover, for the financial year from 1 October 2014 to 30 September 2015.
In our opinion based on the findings of our audit of the consolidated financial statements and combined management report, the accompanying combined management report is in all material respects consistent with the
consolidated financial statements, provides as a whole a suitable view of the Group’s position and suitably
presents the opportunities and risks of future development.
311
312
According to § 322 Abs. 3 Satz 1 HGB we state, that our audit of the combined management report has not led to
any reservations.
Management of TUI AG , Berlin and Hannover, is responsible for the preparation of the combined management
report in accordance with the requirements of German commercial law applicable pursuant to § 315a Abs. 1 HGB .
We conducted our audit in accordance with § 317 Abs. 2 HGB and German generally accepted standards for the
audit of the combined management report promulgated by the Institut der Wirtschaftsprüfer (Institute of Public
Auditors in Germany; IDW ). Accordingly, we are required to plan and perform the audit of the combined management report to obtain reasonable assurance about whether the combined management report is in all material
respects consistent with the consolidated financial statements and the audit findings, as a whole provides a
suitable view of the Group’s position and suitably presents the opportunities and risks of future development.
R E V I E W O F M A N A G E M E N T ’ S S TAT E M E N T R E G A R D I N G T H E U K C O R P O R AT E G O V E R N A N C E C O D E
Under section 8.8.10 R (2) of the UK Listing Rules we are required to review Management’s Statement pursuant
to 9.8.6 R (6) of the UK Listing Rules in the report concerning the UK Corporate Governance Code regarding the
Company’s compliance with the provisions C.1.1, C.2.1 and C.2.3 as well as C.3.1 to C.3.8 of the UK Corporate
Governance Code during the financial year or respectively Company’s explanation in case of discrepancies. We
have nothing to report having performed our review.
Responsible Auditor
The responsible auditor on the audit is Thomas Stieve.
Hannover, 8 December 2015
PricewaterhouseCoopers
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Thomas Stieve
Wirtschaftsprüfer
(German Public Auditor)
Prof. Dr Mathias Schellhorn
Wirtschaftsprüfer
(German Public Auditor)
Forward-looking Statements
FORWARD -LOOKING
S TAT E M E N T S
The annual report, in particular the report on expected developments included in the management report, includes
various forecasts and expectations as well as statements relating to the future development of the TUI Group and
TUI AG . These statements are based on assumptions and estimates and may entail known and unknown risks and
uncertainties. Actual development and results as well as the financial and asset situation may therefore differ
substantially from the expectations and assumptions made. This may be due to market fluctuations, the development
of world market prices for commodities, of financial markets and exchange rates, amendments to national and
international legislation and provision or fundamental changes in the economic and political environment. TUI does
not intend to and does not undertake an obligation to update or revise any forward-looking statements to adapt
them to events or developments after the publication of this annual report.
313
PUBLISHED BY
TUI AG
Karl-Wiechert-Allee 4
30625 Hanover, Germany
Tel.: + 49 511 566-00
Fax: +49 511 566-1901
www.tuigroup.com
CONCEPT AND DESIGN
3st kommunikation, Mainz, Germany
PHOTOGR APHY
Michael Neuhaus (cover photo, p. 78 – 79)
Rüdiger Nehmzow (p. 3, 22 )
Getty Images (p. 20 – 21, 160 – 161)
PRINTER
Kunst- und Werbedruck, Bad Oeynhausen, Germany
The Magazine and the Annual Report are also available online:
http://annualreport2014-15.tui-group.com
This report was published on 10 December 2015.
TUI AG
Karl-Wiechert-Allee 4
30625 Hanover, Germany

ANNUAL REPORT 2014 / 15

Transcrição

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